Financial Tips to Help You Retire in 2025
Financial Tips to Help You Retire in 2025
Planning for retirement can be overwhelming, but it becomes much easier if you start early. If you plan to retire in 2025, there are specific financial tips that you need to implement now to work toward an independent retirement. Here are some essential areas you should consider:
- Estimating your Retirement Budget.
The first step in retirement planning is estimating how much money you need to retire. A common rule of thumb suggests that you may need about 75—80% of your pre-retirement income to maintain a similar lifestyle throughout retirement.
The amount varies depending on health, lifestyle, debts, travel plans, etc. A financial or insurance professional can help determine if this percentage is appropriate for your situation.
- Paying off debts.
Before you retire, it’s essential to eliminate as much debt as possible. Whether credit card debt, mortgage loans, or student debt, any outstanding financial obligations may affect your retirement savings. Eliminating these debts can help you manage your monthly expenses and have more cash for your golden years.
- Evaluating your retirement portfolio.
As you approach retirement, you must revise your investment strategy and adjust your portfolio to manage risk. Moving away from aggressive investments and toward conservative, income-generating assets may be appropriate to your situation.
- Insuring for long-term care.
Many need to pay more attention to the cost of healthcare in retirement as they plan for their future. Understanding health care is key to help you retire. As you age, there’s a higher chance of needing extended medical or nursing home care. Long-term care insurance can help cover these costs and preserve your retirement savings.
- Creating an emergency fund.
An emergency fund is crucial to safeguard against unexpected financial emergencies that could derail your retirement plan. Your emergency fund should be large enough to cover six to twelve months of living expenses.
- Consider a retirement income plan.
As retirement approaches, it’s essential to start thinking about how you may draw down on your savings to help you retire. You may opt for systematic withdrawal plans from your retirement accounts or consider annuities that provide a steady income stream in retirement.
- Take advantage of catch-up contributions.
If you’re 50 or older, the IRS allows catch-up contributions to retirement accounts like 401(k)s and IRAs. This ‘catch-up’ will enable you to save more in these accounts above the standard contribution limit, helping boost your retirement savings quickly before you retire to help you retire.
In conclusion, planning for retirement involves several critical steps and requires diligent financial management. It is paramount to remember that everyone’s financial situation is different. Therefore, working with financial, insurance, and tax professionals can help as you work toward your retirement goals.
4028539-1124e This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives.
Masterworks Fiscal Advisors has dedicated their business to helping our clients solve their financial challenges and achieve their goals. Whether it is developing their businesses, building and helping to protect their families’ futures. Or enabling them to realize their long-awaited retirement dreams. Contact us today so you can begin protecting your future.
