Retirement Income Planning in Orlando
Preparing for the Future in Orlando
Taking the Necessary Steps
- Age
- Debt
- Income
- Expenses
- Investments
- Prior Compensation
There are a couple of necessary steps that you need to take to establish your retirement income. The first step requires that you determine the tax nature and prior earnings that you have accumulated for retirement. A 401k plan and 403(b) accounts have more restrictive tax withholding rules and beneficiary options than Individual Retirement Accounts (IRAs).
Depending on your age, income from a deferred compensation plan has lower tax implications than IRAs. Regular investment accounts have lower tax implications than IRAs. In retirement, you want to maximize income from those accounts with the least tax implications so you can keep more of your retirement income to spend.
Start Looking at Your Expenses
The second step is to review the unique expenses that occur in retirement. These “additional” expenses often get overlooked in normal retirement planning. In retirement, you have more “free” time than you had when you were working. When you have “free” time, you are more likely to travel, play golf, or enjoy your hobbies. These activities require money and you need to plan for these extra expenses when you begin planning your retirement.
In addition, you will most likely be paying for your health insurance. The cost of health insurance is a significant “additional” retirement expense that needs to be taken into consideration.
Review Outstanding Debt
Next, an analysis needs to be done on outstanding debt that you have prior to entering retirement.
The most common forms of debt that are often overlooked include:
- Mortgage
- Student Loans
- Credit Card Debt
- Car or Vehicle Loan
Social Security & Retirement
A portion of your retirement income will most likely come from Social Security. The decision of when to take Social Security is based upon a variety of factors such as age, work history, spouse’s work history, and continued earnings. The decision is even more complicated for a married couple who can collect on each other’s previous work history, pension plan, and retirement benefits. Once we have gone through these first few steps, we can then calculate your projected tax liability in retirement. We do this by thoughtfully examining the amount of retirement income you need and the nature of the taxes on the income you would be receiving.
One of the most intricate and confusing parts of this process is determining the tax implications of your Social Security benefits. Your benefits can either be excluded from taxation or included at up to 85% of your overall benefits. This inclusion as income is a function of the total taxable amount of your other retirement income. Depending on what that amount is and where it comes from, it is often possible to minimize the taxation of your Social Security benefits. Remember, in retirement, you still have to pay Uncle Sam his share but the more you keep from him the more you get to spend!
Examining Your Investment Portfolio
The next step in the retirement income planning process is to review your total overall investment picture. Our financial advisors compare this with the amount of total retirement income needed and begin retirement advice accordingly.
By examining your overall investment portfolio, we can:
Determine if you need to adjust your expenses or your investments- Figure out whether your retirement plan is accurate
- Discuss whether you need to find part-time employment in retirement
