Making decisions about financial planning for retirement should involve lots of careful research. Even the most thoughtfully worked out plans should be reviewed and re-assessed frequently. Expectations which formed the basis of a solid retirement plan last year may need to shift this year because of changes in the markets, new tax laws, and higher costs of living.
In the last five years, we are seeing lots of people in their pre-retirement years whose plans for retirement have come to seem less solid than before. The values of their homes may have taken a plunge in the housing crisis. Many of them are supporting grown children who are unemployed or underemployed. For some, the recession has severely reduced the value of their 401K portfolios.
As people in this age range approach retirement, they need to estimate how much yearly income they will need to live on. If Social Security, along with other pensions they may start to collect, will not be enough, then what are the options to consider? Maybe working part-time, or simply continuing to work a few years longer, will suffice. Planning to downsize to a smaller home or apartment, perhaps in an area where housing costs are lower, may be one way to reduce monthly bills.
People need to consider where to allocate the assets that they have. Depending on how risk-averse they are, having some of their stock portfolio in dividend-paying stocks can be part of a plan to provide income in their retirement years.
Many Americans nearing retirement age have two major assets: their home is the largest one, and their vested retirement account, such as a 401K, is the second largest. Some retirees opt to draw income from their house by getting a reverse mortgage. This isn’t a hugely popular option, though, especially in these times when home values still haven’t rebounded very far.
For people who have a 401K, many will need to choose a way to start receiving distributions from the 401K as an income stream. A similar decision needs to be made about any assets they have in an IRA. Purchasing an annuity to provide lifelong income will be the preferred choice for many people. As retirement approaches, it’s a good idea to learn about the various annuity types. Retirement Planning Sioux Falls SD
For Retirement Planning Sioux Falls SD professionals are knowledgeable about investment options.