Pay Attention to Taxes
One of the biggest pitfalls, taxes. If you don’t plan around taxes, you might find yourself in a sticky situation. First, look for ways to reduce your taxes now in order to achieve more savings potential.
But the next, biggest step is to plan around your taxes in the future. You should consider, for example, living in a state with a lower tax rate. Monitoring your tax bracket is also crucial when you’re planning on making withdrawals from your savings.
By the way, don’t forget about withdrawals you won’t be able to avoid once you turn 72, and keep in mind that you may be hit with tax penalties for early withdrawals too.
For this, you might want to consider talking to a financial adviser!
Take Advantage of Catch-Up Retirement Savings
Catch-up retirement savings can be lifesaving for seniors. After you turn 50 and up, the IRS will make it easier to boost your savings if you haven’t been able to consistently save over a large period of time. Now, it’s crucial for you to put everything you have into these, as they could provide the bulk of your golden years income.
Since both IRAs and 401(k) accounts have limits as to how much you can set aside, these contributions will help you surpass that limit. These change every year, so you have to stay informed ahead of time.
Around the time that you’re closing in on 50 is when you should start making plans on how to best max out your contributions!
We hope all these tips have helped shed some light into what retiring early means! We’d love to hear about your retirement plans, too, so make sure to drop us a comment down below!