Other Retirement Facts:
When it comes to our finances there are a few things that we may be tempted to put off from time to time. But the question is: should we be putting these things off? Generally, you will want to address financial decisions as soon as you can but certain decisions will be based upon a few different factors. Today, we are talking through some common things people tend to put off when it comes to their finances and whether you should be keeping these things on the back burner.
Generally, we’ve been taught to invest in tax-deferred accounts because we will likely be in a lower tax bracket when we retire. But this may not always be the case. Whether to defer taxes depends a lot on specific scenarios. Deferring taxes can get you in some trouble if you are not careful and have a plan for paying the taxes later on. Having a blend of accounts may be a good middle ground, but it is always best to discuss with your financial advisor which accounts will fit your plan best.
Paying off debt can be a big hurdle that we may want to ignore. It is usually always best to pay off consumer debt or what we call “bad debt” as soon as we can. We want to make sure not to build that debt up as we get closer to retirement. Certain debts like a house, may not need to be paid off as quickly, although this will depend on your comfort level with debt and your overall financial plan.
Estate planning and creating legal documents are just as important as any part of our financial plan. Especially developing a will and sorting out your power of attorney. You definitely want to meet with a lawyer to develop these documents as soon as you can. This is one thing that you will not want to wait on. There are a lot of uncertainties in life, but if we plan right, we can make the future easier for ourselves and our family.
Choosing to delay your Social Security benefits can be beneficial to most. Waiting can certainly boost the benefits that you will be receiving but you will want a plan to fill this income gap. A lot of different factors can go into this decision though including your health and spouse’s Social Security.
Lastly, you do not want to wait on making a plan! A solid financial plan will address many of these decisions and make sure that you are set for retirement. Waiting to make a plan till you are close to retirement or in retirement is not something you will want to do. The less time you have to create a plan, the less time you have to address financial issues.
Listen to the entire episode or skip ahead using the timestamps below.
[0:39] – Catching up with Phil
[1:59] – Deferring taxes
[4:50] – Waiting to eliminate debt
[6:48 ]– Legal and estate documents
[9:30] – Delaying the start of social security
[11:57 ]– Getting a plan
A Quotable Moment:
“Deferring taxes, that’s where a lot of the clients I work with have gotten themselves into trouble.”