Why A Good Education Is Imperative For Your Retirement Finances
No one questions the conventional wisdom that a good education is important for your professional success, but is that the only role it plays in your financial life? While the right degree and school can help you find a job and climb the ranks in your chosen profession, education also plays a critical role in your retirement readiness. The Math of Retirement: Any solid college degree is going to feature some math education, but it may not be the financially-focused math you need to figure out your post-retirement income needs. Concepts such as the 4 percent rule and the time value of money require specialized mathematical understanding that often comes only with financial education. Limiting debt and creating a budget for post-retirement are also specialized skills that require focused education to master. Another special math skill needed is one that allows you to determine the best time to take Social Security. While you may be able to trigger the benefit at age 62, doing so can permanently cut your payment amount. Depending on your health and life expectancy, it could instead be better to choose a later retirement age.
Time for Tax Class: Retirement readiness requires a specialized understanding of the potential tax impact of the financial decisions made after you stop working. Whether it’s potential income taxes, taxes on Social Security income, or capital gains taxes on investments sold, there are a lot of taxation details you need to learn to come up with the best, most tax-effective retirement strategy. Planning for a Decline: As you age, your health may deteriorate and your mental state may as well. That means you need to understand how to give someone the legal power to act on your behalf. You’ll want to understand the limitations imposed on them, how to safeguard yourself when you’re in that person’s care, and how to best communicate your property and needs to them. The concerns of a retiree are many. You may be most concerned about avoiding unnecessary taxes, making your savings last, passing on your property to the next generation or coming up with a care plan when you’re no longer able to make decisions for yourself. No matter what you’re most concerned about, a retirement finance education is a vital tool to prepping you for that next phase of your financial journey. Just as you wouldn’t skip a college education and still expect professional success, don’t skip out on your retirement finance education and still expect to enjoy ongoing financial security. Edward Schinik has been with the Investment Manager since 2009 and has been with one Affiliated Investment Manager since 2005.