Three Crucial Factors Involved in Retirement Planning

Retirement shouldn’t be an afterthought. These days, young professionals are being encouraged to start thinking about the later decades of their lives. After spending many decades as part of the workforce, individuals must continue to lead a financially stable life even after their regular employment. Here are some crucial factors that must not be overlooked in planning for retirement:

Diversified investments

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Aside from a person’s retirement fund, it’s also important to start diversifying assets that will grow through the years. A common mistake made by many is that they only think about investments later in their life. Investing one’s money doesn’t need to start expensive. With the right financial planning, an individual can start building a portfolio without using funds from major income streams.

Taking out funds from a retirement plan

Tough times or a change of jobs can lead a person to cash out of a retirement plan. While choosing to cash out seems to be an attractive option sometimes, a better alternative would be to transfer the existing account to another retirement account. This will allow the allotted retirement funds to grow while remaining untouched. Instead of taking funds out of retirement, it would be better for an individual also to set aside finances for an emergency fund.

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Overlooked taxes

Regular 401(k) accounts are not tax-free. This means that a retiree will get taxed every time they take out funds in the future. Instead of just relying on the traditional retirement plan, investing in tax-free retirement streams will allow an individual to have more income in the future.

Employees should be wise about where they will invest for their retirement years. Seeking the help of reliable financial planners will make the decision making easier and hassle-free.

Andrew Corbman and the team at ASC Financial help individuals identify potential shortfalls of their Social Security funds and maximize their revenue streams post-retirement. Visit this page for more information.

Weighing in the advantages of cash-value life insurance for retirement

Life insurance is usually associated with the young. Younger adults, particularly those with children under their care, are typically encouraged to take a life insurance policy to ensure that their dependents have some sort of financial backing in the event of their untimely demise. Beyond this, these policies can also serve as an invaluable tool in the retiree’s financial arsenal, particularly for those who have maxed out their contributions to 401(k) and other retirement accounts.

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Life insurance policies can provide a retired married couple with some assurance that their spouse would have an additional, tax advantaged source of funds should one of them outlive the other. The death benefit payout received by the bereaved widow or widower would then be used to fund other sources of retirement funds.

The many varieties of cash-value life insurance can also provide retirees with another tax-advantaged place to store their excess retirement funds, delivering an interest payout as the funds accumulate. These funds can be accessed while the individual policyholder is still alive, in the form of a loan or withdrawal, which are tax-free. When used at the appropriate circumstances, this method can deliver some retirees with yet another source of retirement revenue.

However, there are a few disadvantages to this strategy as well. Insurance costs can affect the performance of the policy as an investment asset. Likewise, policyholders should choose when they take out a loan or withdrawal from the policy carefully; the amount is deducted from the final death benefit unless it is paid back.

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Andrew Corbman and the ASC Financial team help older adults explore their options and maximize their revenue streams for retirement. Visit his company’s website for more information.