True to form, Baby Boomers are redefining retirement, too.
The 76 million Americans born from 1946 to 1964 have driven major national trends in their lifetimes and are living longer than any previous generation. Today, with the oldest of them having turned 60, some are already retired, or have been forced to retire, and many more are thinking seriously about retirement.
There is a lot to think about for the aging boomer:
- Do you want to retire outright and never work again? How many years do you need to keep working before you can realistically afford to do that?
- Do you have the opportunity or desire to reinvent yourself and start a new career—in other words, retire sooner from your present job, and spend more years following a passion, which also can provide at least a modest income?
- With large corporations continuing to downsize, your company may offer you a retirement package. If so, it makes a big difference how you choose to receive it. If handled well, how far can your package take you toward financial independence?
- If your corporation offers a traditional pension—perhaps in addition to a 401(k) plan—how much is your pension account worth? Have you been with the company long enough for those assets to be fully vested? Will the plan continue to be funded? Should you take your money as a lump sum? What about your beneficiaries?
- When it is time to take your 401(k) assets, what are your options? What’s the best way to designate beneficiaries for your legacy?*
- If you are fortunate enough to have stock options as part of your corporate compensation plan, how should they be factored into your retirement plan? Do you fully understand what you own?
- Once you have retired, how much can you take from your account each year and still be confident you won’t outlive your money? What is the best way to structure your assets to benefit your heirs? What role should life insurance play in retirement and estate planning?
- Federal tax law is designed to reward investing for retirement, but it gives the full rewards only to those who know how to take advantage of the rules. The options are many, the rules are complicated, and tax laws change from year to year.
How can you get all this under control without making it a full-time job? This is where your financial advisor, along with your tax and legal advisors, come in. Ask these professionals to help you address concerns connected with planning your retirement—everything from clarifying your dreams of financial independence, to the psychology of spending and saving, to developing an investment policy statement, to planning your estate.
This article was written by Wells Fargo Advisors, and is provided courtesy of Branch Manager and Senior PIM Portfolio Manager David DeNitto, and Financial Advisor Kristofer Lange, in Mesa. Call (480) 830-5250.
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* Withdrawals are subject to ordinary income tax, and may be subject to a federal 10 percent penalty if taken prior to age 59.5. Wells Fargo Advisors/Wells Fargo Advisors Financial Network is not a legal or tax advisor. However, our financial advisors will be happy to work with you and your chosen tax and legal advisors to help you meet your financial goals.