PHOENIX — With the overhanging federal government shutdown, it’s more important than ever to properly prepare for retirement, especially because of how rapidly the economy is shifting.
How Social Security and Medicare assets are potentially impacted by shutdowns has been a recent topic of conversation. It has emphasized the importance of knowing how these federal programs work.
The million-dollar question is: When should you start taking from Social Security?
According to Stewart Willis, president of Asset Preservation Wealth & Tax, there are “dozens of ways” to pull from Social Security funds, especially if you’re married. That being said, the exact time is variable but comes with irreversible consequences.
“This one-time decision can also affect how much you pay in taxes, how much you receive in lifetime payouts for you and possibly your spouse,” Willis said in the latest episode of The Asset Preservation Hour. “You could increase your investment by 10s of thousands of dollars just by being informed.”
Timing really is everything, as poor financial planning may lead to stress, especially when health expenses pop up and long-term care becomes necessary.
Willis cited statistics that show 70% of women and 44% of men will require some form of long-term care after turning 65 years old, so smart investment and Social Security activation are not things to put on the back burner.
He highlighted this by examining the state of his mother-in-law, who is in a nursing home.
“I cannot overstate the importance of having a plan. At the end of the day, she had long-term care insurance, but it doesn’t keep up with her cost of care,” Willis said. “That’s just one fact. I’m probably going to end up being out of pocket with this thing by the time it’s over because it wasn’t properly planned all the way through.”
Retirement readiness and tax efficiency
When constructing or tweaking your retirement plan, avoid speculative investments where you’re betting on short-term boosts. Rather, build with a balanced approach to better ride the waves of market fluctuation. Willis recommends that people within a few years of retirement should shift to a fixed-income account in order to combat shifting markets.
Identifying the most tax-efficient strategies, such as converting your traditional 401(k) account to a Roth IRA, can also help reduce risk of future tax hits. Willis said Roth conversion can be particularly beneficial to those expecting to jump into a higher tax bracket.
The fourth quarter of the year is “rough” for scheduling portfolio reviews, according to Willis, but is nonetheless “the most important time of the year.”
“Fourth quarter is rough, but it’s rough for a reason because it’s the most important time of the year. And we’ve freed up a few spots here over the next few weeks here to do a fourth-quarter review,” Willis said.
Claim a free portfolio review by Asset Preservation Wealth & Tax online, or call 877-573-8437 for more information.
The post How to plan for and navigate retirement in a shifty economic environment appeared first on KTAR.
