Many Michigan baby boomers dream of retiring early, but they also worry about whether they can still provide for children and grandchildren. Contributing catch-up contributions to a Roth IRA or company-sponsored retirement plans is one way to beef up your savings. If you are 55 or older, it’s also a great time to consider whether you are making the most of tax-deferred retirement plans. An elder law attorney can help you with a retirement plan trust so you can protect your loved ones. If you want to retire early, there are steps you can take so you can retire at 62. According to a recent article by time.com, it’s not just about building up a large retirement balance, but protecting what you’ve built. Baby boomers who work in industries that aren’t stable can take every precaution in case they do experience a job layoff before reaching their full retirement age.
- Having a career backup plan
According to time.com, unemployed baby boomers in the 55 to 64 age category tend to stay unemployed for an average of 11 months. If you are working at a full-time career, take on some extra side jobs. Investing in dividend-paying mutual funds or exchange-traded funds is one fairly conservative ways to start building up passive income in case you lose your primary job. Many pre-retirees save in a retirement account such as 401(k) or Roth IRA as well as a regular investment account.
- Downsizing before you have to
Instead of waiting to downsize because you lost your job and can’t pay the mortgage, consider scaling back ahead of time. If you have owned your home for 10 or more years, you could have enough equity. After selling your home, take the cash and make an all-cash purchase on a less expensive home. Other hidden savings include lower property taxes, home owner’s insurance, utility costs and maintenance. If you own your home outright, it’s more likely you’ll be able to retire early.
- Shift money in your retirement portfolio
Most people review their retirement plans at least once a year. As you grow older, it’s wise to put more money in conservative investments and less money in risky individual stocks. The time.com article recommends dialing down equities or stocks to half or less. Once you retire, you don’t want to take as many risks with the investments inside your retirement plans.
- Consider a Roth conversion
If you make too much money to contribute to a Roth IRA, you can still get money into a Roth by converting money from a traditional IRA into a Roth. You will have to pay income taxes the year you convert from a traditional to a Roth. One trick is to convert small amounts every year leading up to your retirement so you don’t have to foot the entire tax bill all at once. A Roth is a valuable asset left to your children and grandchildren as part of an estate plan. However, it’s wise to have an elder law attorney review your retirement accounts. Using the most tax efficient methods means you won’t have to worry about your loved ones.
For some people, it makes more financial sense to keep working a few years beyond the early retirement age of 62. Whether you decide to work until you are 64 or 70, rely on the expertise of an elder law attorney to guide your retirement plans.
Elder law attorney Christopher J. Berry and the Elder Care Team specializes in retirement and long-term care planning. We can help you set up a retirement plan trust to maximize tax deferment for your beneficiaries and protect you while you are living. For more information on the best retirement plans for retiring early, please contact us.
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