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America is about to experience a retirement tidal wave.<\/p>\n
By 2030, about 20% of Americans will be 65 or older, according to the Census Bureau (1). And by 2034, for the first time in history, older adults will outnumber children in the U.S.<\/p>\n
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Some Americans hope to retire even earlier than 65. But with the cost of living on the rise, they may question whether that\u2019s possible \u2014 especially given that as costs increase every year, income tends to fall from age 64 onwards.<\/p>\n
According to Kiplinger, the median income for those aged 65 to 69 was $68,860, with that figure tumbling to just $47,790 for those aged 75 and older (2).<\/p>\n
Given the average annual expenditure for those age 65 or over is $61,432, according to the Federal Reserve Bank of St. Louis, many Americans are likely spending more than they earn (3).<\/p>\n
Before you panic about having enough money in your nest egg, here are three key tips to help guide your retirement decision.<\/p>\n
1. Looking at the 4% rule <\/p>\n
The first principle worth considering when planning your retirement is the 4% rule. Many financial advisors recommend that retirees withdraw just 4% from their savings each year. This means you should try to find a number that will make a yearly 4% draw down last for 30 years.<\/p>\n
The main question is whether this amount of income will be enough for you to maintain your lifestyle when combined with Social Security, pension, or any other payments.<\/p>\n
For instance, if you have $500,000 saved, then a 4% withdrawal rate is just $20,000 per year. However, if you have $2 million, that would be a much more livable $80,000.<\/p>\n
Read More: Robert Kiyosaki warned of a ‘Greater Depression’ \u2014 with millions of Americans going poor. Was he right?<\/a><\/strong><\/p>\n Consider working with a professional <\/p>\n Rather than basing your retirement on general guidance, it could be worth working with a qualified financial professional before making retirement plans.<\/p>\n Research from Vanguard shows that working with the right financial advisor could add about 3% to net returns over time (4). That difference can become substantial. For example, if you started with a $50,000 retirement portfolio, professional guidance could mean more than $1.3 million in additional growth over 30 years, depending on market conditions and your investment strategy.<\/p>\n Finding the right advisor is simple with Advisor.com<\/a>. Their platform connects you with licensed financial professionals in your area who can provide personalized guidance.<\/p>\n A professional advisor<\/a> can also help you determine how many years you have left to invest before retirement and assess your comfort level with market fluctuations \u2014 two key factors in building the right asset mix for your portfolio.<\/p>\n Through Advisor.com, you can schedule a free, no-obligation consultation<\/a> to discuss your retirement goals and long-term financial plan.<\/p>\n Diversify your investments for better protection <\/p>\n While many retirees know about and use IRAs for their savings, fewer leverage IRAs for investing in commodities.<\/p>\n With a gold IRA, you can get similar tax benefits to other IRA accounts, while investing in safe-haven assets that have less volatility than the stock market.<\/p>\n For example, while the market crashed in 2008, gold prices rose, cushioning the portfolios of investors who were savvy enough to diversify. Gold has also been on a historic bull run, and is up about 70% year-over-year as of early January (5).<\/p>\n One way to invest in gold that also provides significant tax advantages is to open a gold IRA with the help of Priority Gold<\/a>.<\/p>\n Gold IRAs help investors hold physical gold or gold-related assets within a retirement account, which combines the tax advantages of an IRA with the protective benefits of investing in gold<\/a>, making it an attractive option for those looking to potentially hedge their retirement funds against economic uncertainty.<\/p>\n To learn more, you can get a free information guide that includes details on how to get up to $10,000 in free silver<\/a> on qualifying purchases.<\/p>\n 2. Assessing a $1 million minimum <\/p>\n A Northwestern Mutual survey found that Americans believe they need $1.46 million to retire comfortably (6).<\/p>\n But for many, that number isn\u2019t realistic, and not always necessary. This is why it\u2019s important you build a retirement goal that\u2019s based on the advice of a qualified financial advisor who understands your goals and budget.<\/p>\n Just like the 4% rule, this figure is best viewed as a rough benchmark \u2014 not as a requirement for retirement.<\/p>\n Invest effortlessly with everyday purchases <\/p>\n Beyond high-yield savings accounts, investing in the stock market is another way to lock in higher returns \u2014 though it carries greater risk.<\/p>\n When you invest in broad-based index funds, you can minimize your risk by spreading your investment across hundreds of companies in one go. For example, the S&P 500 was up about 30% as of early May (7). And there are now easy ways to invest daily, without even thinking about it.<\/p>\n With Acorns<\/a>, you can turn every purchases into a micro-investment.<\/p>\n When you spend money with your debit or credit card, Acorns automatically rounds up the total cost to the nearest dollar and invests the remainder in a diversified portfolio \u2014 so even when you have to spend, you’re investing money at the same time.<\/p>\n Think about it like this: that coffee for $3.25 every morning? It\u2019s now a 75-cent investment in your future.<\/p>\n If the round-ups aren\u2019t enough, you can also set up monthly recurring deposits. Even better, if you sign up for Acorns today with a small regular contribution of $5, you can receive a $20 bonus investment<\/a> to kickstart your investing journey.<\/p>\n 3. Tackling the rule of 55 <\/p>\n This last rule of thumb looks at the tax implications of retiring early. While you may have enough savings to retire early, there can be serious tax consequences that mean you\u2019ll end up paying normal income tax on your retirement income.<\/p>\n Usually, you\u2019d face a 10% tax withdrawal penalty for making an early withdrawal from a tax-qualified retirement plan like a 401(k). But according to the 401(k) rule of 55, you can withdraw from your current employer\u2019s plan penalty-free if you leave your job in or after the year you turn 55 \u2014 avoiding that 10% fee.<\/p>\n Deal with your debt head-on <\/p>\n It also might not be beneficial to retire early if you\u2019re still paying off debts. To make sure you\u2019re in the best possible position when that time comes, you\u2019ll want to have settled as many of your outstanding debts as possible.<\/p>\n To expedite this process, you can use a free service called Credible<\/a> to consolidate your debts into one monthly payment.<\/p>\n Rather than worry about multiple bills that each have their own minimum payments, deadlines and interest rates, you can take out a new loan with a lower interest rate<\/a> and use it to pay off your other debts immediately.<\/p>\n You\u2019ll then only have to make a single payment each month, and the lower rate will potentially save you a huge amount in interest \u2014 more money that you\u2019ll be able to set aside for retirement.<\/p>\n And with Freedom Debt Relief, you can speak with a certified debt relief consultant for free<\/a>, who can show you how much you can save by partnering with them.<\/p>\n If you’re eligible, they can negotiate settlements with your creditors until all of your enrolled debt is resolved.<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/strong><\/p>\n Article sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Census Bureau (1<\/a>); Kiplinger (2<\/a>); Federal Reserve Bank of St. Louis (3<\/a>); Vanguard (4<\/a>); APMEX (5<\/a>); Northwestern Mutual (6<\/a>); S&P Global (7<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. America is…\n","protected":false},"author":3,"featured_media":782013,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[15],"tags":[64,46324,7780,12157,74384,4061,255,700,16341,67,132,68],"class_list":{"0":"post-782012","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-business","9":"tag-census-bureau","10":"tag-dave-ramsey","11":"tag-financial-advisors","12":"tag-investing-in-gold","13":"tag-jeff-bezos","14":"tag-personal-finance","15":"tag-retirement","16":"tag-retirement-plans","17":"tag-united-states","18":"tag-unitedstates","19":"tag-us"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/116539187988131643","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/782012","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=782012"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/782012\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/782013"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=782012"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=782012"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=782012"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}