You need to figure out what kind of retirement you want to finance. Is it going to be one of travel and luxury, or more of a quiet simple life spent on the shores or the nearest lake. Is your spending rate going to change? Track your expenses and then project out 30 years, and don’t forget to include tax money. Everyone should consider securing a level of income to live on. If Social Security will not be sufficient then you need to look into purchasing single-premium lifetime annuities. You won’t go wrong if you think 3% return. Roth accounts are used to guarantee no taxes since you pay taxes already. If you do not expect your income to go down, then this is a good way to go. Make sure you understand the Roth Rules.
- Ask yourself what percentage of your remaining assets you would like to spend each year, as this will help determine your investment strategy.
- It’s often expected that a person’s tax rates will go down in retirement, but that’s not necessarily true.
- When seeking to pull funds out of a traditional IRA, arrange it so your net taxable income (after deductions) is near the top of a tax bracket.
“Project your expenses forward for 30 years with your best estimate of the kind of retiree you will be.”