You’ve done it. You’ve finally reached retirement after a lifetime of hard work. Now that a regular salary won’t be coming in anymore, follow these tips to stay smart about your finances while you enjoy your hard earned retirement.
If you took out a “Whole Life” life insurance policy on yourself when you were younger, it was a smart move. It’s been accumulating dividends on itself the entire time it’s been sitting there, earning you money to use during your retirement years.
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You can do many things with that money now. You can let it continue to grow or borrow against it while the balance continues to grow, or you can cash it out. Rather than cashing it out and letting it sit around earning less in a savings account than it does earning dividends in the policy, you may want to consider annuitizing it. This basically turns all the money you made from your policy into a new monthly salary for yourself to keep the income flowing in.
Your health insurance decisions are equally important for your bank account. Don’t get caught up spending more out of pocket than you have to for doctors visits or procedures. Shop around for the right Medicare supplement plans for you, and keep your money in your pocket.
Individual Retirement Accounts are crucial for keeping the money flowing in during retirement as well. You may have invested a portion of your salary all your life to your employer’s 401(k), and may have even enjoyed a percentage match from that employer. You may have also kept your own personal IRA in addition to the 401(k) where you invested more of your money and took advantage of its special tax advantages.
Now you’ve reached an age where you can start using all of your diligently saved money. You can also choose to borrow against these accounts, or opt to have the balances paid out to you each month as income.
Charities and Trusts
Another option for taking advantage of tax breaks is to donate portions of your money to charity or a Trust in your name. Special tax deductions apply for money donated, and a Trust is the perfect way to pass your wealth on to younger generations of your family. You can designate it for special interests like education or health insurance, or simply leave it in the account to earn more money on itself as it sits. Then make it accessible to its beneficiary at a certain age to be able to use the money as they see fit.