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Retirement planning can be a bit complex. There are multiple factors to weigh in, right from healthcare and inflation to estate planning, business succession planning, taxplanning, and more. However, the main drawback to this can be the lack of foresight regarding what and how to plan.
Healthcare costs can be brutal This is one of the most overlooked challenges of early retirement. Unless you’ve planned a dedicated healthcare bridge (or have access to employer-sponsored retiree coverage), this cost can derail even the most detailed budget. Medicare doesn’t kick in until 65. There are no RMDs with Roth IRAs.
According to the Fidelity Retiree Health Care Cost Estimate, the financial burden of healthcare in retirement is substantial. As a couple aged 65 in 2023, you may need approximately $315,000 saved (after tax) to cover your healthcare expenses. The absence of a dedicated healthcare fund can lead to unexpected financial hardships.
While these can be avoided, there is another cash outflow that can considerably lower your savings and returns and is also hard to avoid – tax. Taxplanning is essential. Tax is charged on every penny you earn. A 529 also offers tax-free withdrawals as long as the money is used for qualified education expenses.
At that point, you likely have a clearer understanding of what it takes to maintain your current standard of living, and that can be the starting point for your retirement planning. Although retirement may come with a lot of changes that include downsizing, travel, additional healthcare needs, etc.,
So, if you separate from the company near the end of the year, earning a full year of salary plus severance payouts, you could be pushed into a higher tax bracket. Taxplanning for a transition out of Intel is critical. 18 months of coverage is being offered for COBRA plus a $20k Healthcare bonus.
For instance, the level of education you get, the quality of healthcare you can afford, and the lifestyle you can adopt all depend on your wealth. You can also use strategies like tax loss harvesting to use your investment losses in a year to offset your taxes. can help you with taxplanning.
You can effectively fund your healthcare expenses, support dependents and family members, or pursue leisure activities like traveling with a well-structured investment portfolio. A sound investmentplan provides the necessary framework to sustain your desired lifestyle and achieve your retirement aspirations.
Well, first of all, we work with financial advisors of all types in the industry, non-Vanguard financial advisors, so you’ve got broker-dealers, independent registered investmentadvisors, RIAs and bank wealth advisors. They’ll do taxplanning, right? And they bring a lot of value, right?
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