According to the expert, retirement planning is a process that many people neglect. They think about it when they are nearing retirement age, but by then, it is too late to do anything about it.
This article will share some tips on how you can distribute your retirement money wisely.
Consider your needs
The first thing you should do is make sure you have a good idea of your retirement needs. This will help you determine how much money you need to save and what kind of investments to put your money into.
Wellman Shew says you need to decide if you want to take the lump-sum distribution or annuity payout. If you choose the lump sum, then you’ll need to figure out how much of that amount you want as a one-time payment and how much of it will be in monthly payments.
If you opt for an annuity, then you’ll need to determine how long it will run and what the monthly payout will be. Shew explains that you can also choose which company’s annuity product you want.
Establish an automatic withdrawal
You should also set up an automatic withdrawal so that you don’t have to worry about this later on in life. Wellman Shew adds that it might be wise to consult with a financial advisor before making any decisions on the best way for you to distribute your retirement money wisely.
Find out how much money you need to retire at age 65 or 70
The most common financial goal for most people is to retire. It’s a goal we all hope to reach one day, and it’s also a very individualized process. The amount of money you need to retire depends on many factors such as how much you spend per year, your current age, your desired retirement age, how long you plan on working, etc.
Understand the risks involved with investing your retirement money
Wellman Shew explains that investing your retirement money is a big decision, and it should not be taken lightly. There are many factors to consider when making this decision. If done correctly, investing can help ensure you have enough money for the future. However, if done incorrectly, it could lead to financial ruin or even bankruptcy. Examples of risks include increasing inflation, unstable interest rates, retirement plans with poor performance, etc.
Understand how taxes impact investment returns
The first thing to understand about taxes and investments is that there are two types of tax: income tax and capital gains tax. Shew says income tax is levied on the earnings from the investment, while capital gains tax is levied when an investor sells stocks or other assets and realizes a gain from the sale.
He holds a business administration degree and has been in the insurance industry since 1982. As the founder and owner of Shew & Company Inc. since 2005, he is a specialist in employee benefits, Section 125 plans, health savings accounts, long-term care, 401k plans, life insurance, and disability insurance. Wellman Shew is currently the agency manager of employee benefits brokerage at his company.