The Defensive Retirement Planning
The best offense is a good defense, as the saying goes
, and it can also translate to the possibility that defensive retirement planning is as good as planning that puts you at the offense with aggressive investing and proactive saving strategies. On the subject of planning for your retirement, you can be on the defense by constantly identifying ways to lower your overall expenses, whether they be relatively trivial expenses such as magazine subscriptions or major expenses such as your yearly tax burden. Here are some defensive retirement planning tips:
Eliminating Debt
Any good retirement plan always involves reducing debt as much as you can, as soon as possible. When it comes to retirees who mostly depend on fixed income sources, the impact of debt is most significant as they do not have the buffer of high possible returns from high-risk investments. Although the task of eliminating debt can seem impossible at the onset, it is a financial move that you can do on your own.
Eliminating debt can be achieved with the snowball method. First, you will have to calculate the amount you can pay towards debt per month. You can use the cash to make minimum payments on what you owe, with the exception of the least expensive debt (which you will place any extra money towards after everything else has been paid). After paying off the debt that is least costly, you can then go to the second least expensive debt, and so on. The method is labeled as such because your debt payments snowball per eliminated debt, turning the process of debt elimination into a more manageable and less daunting effort.
Lowering Your Tax Burden
Although it may not be possible to avoid tax payments altogether, you can reduce the strain of your tax burden on your finances by deferring taxes or lowering them to some extent. You can go for retirement savings accounts that come with tax advantages, such as IRAs or 401Ks. If you are qualified, you can also transition to or open a Roth IRA, which requires tax payments now and results in tax-free distributions once you reach normal retirement age. If you, your tax advisor, or retirement planner finds it feasible because you will have to increase how defensive your retirement planning is, you can also live in an area that does not implement taxes on Social Security benefits or pension payouts
by: Katherine Smith
Taxes imposed on lawyers to answer general questions about the IRS When to seek help of a tax lawyer The Cgt Retirement Exemption Can You Contribute Real Property ? Things To Be Kept In Mind While Hiring A Divorce Lawyer In Miami How To Find A Divorce Lawyer In Miami U.s. Divorce Lawyers: Do You Feel Like You Play An Accountant On Tv? (part 1) Investing for a Secure Future Can a Hip Replacement Lawyer Help Me Determine If I Have a Recalled Hip System? Exciting Activities Await in a Retirement Community Endless Opportunities Come with Retirement Massachusetts Foreclosure Lawyer: When You Need The Best Investing In Your Beliefs Investing in Residential Properties