Today’s question is, “What are the different types of retirement?”
The Importance of Budgeting
We spend our lives saving, thinking about retirement, hoping for retirement, and then you get there and that question of “what’s it going to look like for me?” is at the forefront. Ideally before retirement, that’s really when you plan and ask the important questions. “How much income do I need? Do we need? And where is it going to come from?” Because if you’re getting a paycheck all these years now, that’s going to stop. So where is that next paycheck going to come from? And how big does it have to be? A lot of people spend working years not really having a budget or wanting a budget. But a budget is not about restricting spending. It’s about ensuring you’re not paying taxes on money that you’re not using.
You don’t want to have all your money in the bank because of course, it’s not growing a lot and it’s getting taxed and safety is good, but you need growth, too. So we start having conversations about what is retirement going to look like? Are you looking to stop doing what you’ve been doing all these years and maybe work in some capacity? Maybe at a job that’s more fun? Maybe you’re going to earn some money doing that and potentially health insurance doing that because if you’re going to retire before 65, a big focus is you can’t get Medicare yet. So what are you going to do?
Important Ages in Retirement
- 59 and 1/2 for most people is the earliest you’d want to touch your retirement money or else you might be getting a penalty.
- 62 is the earliest you can trigger Social Security. I’m not necessarily recommending you do it, but it’s an option.
- 65, as I said, is Medicare. Full retirement age is a big deal for most people watching 66, 67 years old.
- 67 years old is when you can draw social security, continue to work and keep all your social security. Now you still get taxed on it, but you don’t get penalized on it because penalties are never good.
- 72 is when the IRS is going to force you to start drawing money out. Unless you’re still working and you have a plan at work, you don’t have to touch that one. You do have to touch the other.
There’s a lot to it, but think about what your retirement is going to look like. Where do you want to live? Do you want to work? And how much money do you think you’re going to spend? It’s a hard conversation, but it’s a great one to be having before you retire. You don’t want to be surprised when you do and be looking at the different phases of retirement. Are you going to move? Are you going to travel? You probably won’t do that forever, so what will life look like moving forward? That’s why planning is so important and is an ongoing process, to make sure that your plan is doing everything that you need it to do.
Thanks for joining me and I hope you found this information helpful!
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