Good Lifestyle

Secure your financial future is an important way to save your quality of life even in your years. Of course, in today's economy, it is easier to say than to do, in particular on a middle class income. If you start planning retirement or if you are ready to make the transition, it is important to be aware of the traps that could influence you. In particular, financial experts say that you will want to avoid these nine current errors if you withdraw on middle class income.

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It may be tempting to leave the world of work as soon as you can, but experts say that retirement too early can have a detrimental impact on your long -term finances.

Bob chitrathorn , CPFA, financial director and vice-president of wealth planning at Simplified wealth management , said that it is important to execute the figures to make sure you can reach both ends before breaking the links with your current business.

He adds that people who retire early without plan will begin to spend their retirement funds and lose the advantages of compound interest. "This can force them to go back to work in recent years," he warns.

If you do not have an designated distribution strategy, you will not know how much money you are able to withdraw each year without lacking money. Some retirees spend too much at the start of retirement, leaving them high and dry later in life.

When you develop your plan, be sure to account for a Long life expectancy So that you don't have a problem in old age, said Diana Howard , financial analyst at Coupon birds . "It is better to have more than what you need, to leave expensive beings or important charities than not enough to live comfortably in your last years," she said Better life.

During retirement planning, many middle -class retirees do not take into account the high cost of health care. They also do not realize how their health related to health can increase as they age. AE0FCC31AE342FD3A1346EBB1F342FCB

As these costs arise, you can find yourself spending your harshly won savings if you have not created an designated cushion to compensate health invoices . Chitrahorn says that "could radically harm your plan to stay retired".

Although registration in Medicare offers many elderly coverage, you may need to pay your pocket for more than you doing private insurance during work. Calculation of these costs in advance and the generously attribution for medical emergencies could be paid in the long term.

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Another current error made by persons retiring on an income from the middle class is not to take advantage of the tax alternatives at their disposal.

"Everyone should aim to legally reduce the amount of the tax they should pay throughout their lifetime," said Chris Urban , CFP, RICP, founder at Planning of the wealth of discovery .

"If you are in a relationship, you must consider the social security services of each spouse / partner alongside your current income to offer a strategy to minimize the tax burden of your current / future advantages", continues Urban. “Up to 85% of your social security services could be taxable depending on the calculation of the“ combined income ”of the Social Security Administration. Refleted planning and consideration of the cost to claim the advantages of each spouse between 62 and 70 years is necessary to guarantee a preferred tax result. ""

The financial expert adds that in addition to having a social security demand strategy, Proactive tax planning Should also take into account the tax environment where you live, how long you will continue to earn income, opportunities to convert assets before tax assets after tax (Roth conversions Ira, for example), and even more. Consultation with a financial planner can help you navigate these subjects with all the necessary information.

Tyler Meyer , CFP, financial planner and founder of Abundant , says that many pensioners in the middle class also underestimate their general retirement expenses. This can cause budgetary deficits later, he warns.

This could include the increase in the cost of rent, leisure activities, unexpected emergencies, etc. "Retirees should carry out an in-depth assessment of their expected expenses and integrate a stamp for unforeseen circumstances in order to ensure retired financial stability," he recommends.

Social security has never been intended to provide a decent salary for retirees. In fact, the Social Security Administration estimates that the program should represent around 40% of the old wages of the average worker.

However, many people rely on Social Security as a Primary income source Retired, according to The Motley Fool. About 62% of retirees who receive social security say that it represents at least half of their monthly income, while 34% say that it provides between 90 and 100% of their monthly income.

"According to only social security can leave retirees vulnerable to profits reductions or inflationary pressures, compromising their financial security," explains Meyer. "Instead, retirees should diversify their sources of income by completing social security by personal economies, retirement services and investment income to reach greater financial resilience."

In relation: 7 budget hacks for retirement, according to financial experts .

Another error that the middle -class retirees make is to poorly manage their debt as they go to a fixed income . This can take the form of credit card debt, student loans or mortgage loans, which can all contradict limited retirement income.

"Failure to comply with debt before retirement can hinder financial flexibility and erode retirement savings over time," said Meyer. "Retirees should prioritize debt reimbursement before retirement, focusing on high interest debt first and adopting prudent debt management strategies to mitigate retired financial charges."

Howard says that one of the biggest errors you can make is to invest in retirement early in life. Indeed, the compound interest is crucial to build your nest egg. If you have not saved - or you haven't saved enough - The best time to start investing in your future is currently.

"Start saving for your retirement as soon as you can. Although it is not an error, you can cancel if you are close to retirement, all those who still have a good number of years in employment should hold account of this advice, "says Howard. Be sure to take advantage of all the 401 correspondence programs (K) that your employer can offer, she adds.

Finally, Howard says that many pensioners in the middle class make the mistake of withdrawing from their retirement funds for non-retirement costs, incurring huge costs in the process.

"If you withdraw from your 401 (K) before you are 59 and a half, in most cases, you will be subject to a 10%distribution tax penalty. You may be eligible for a withdrawal of Difficulty that could be exempt, but it would be to be discussed with the administrator of your employer's plan. Of course, there is also another drawback outside the penalty - you will have less money in your account when you take your retirement, "she warns.

Best Life offers the most up -to -date financial information for high -level experts and latest news and research, but our content is not supposed to replace professional advice. Regarding the money you spend, save or invest, always consult your financial advisor directly.