- Roth IRA – Having a Roth IRA is good because you can prepay tax on your retirement savings, so you won’t have to pay tax on withdrawals when you retire. Roth IRAs are even more beneficial to young people that are in low tax brackets, especially if they believe they’ll later be in a higher tax bracket in retirement. Investors can also convert traditional IRA assets to a Roth, but they should take into account that they’ll have to pay tax on the amount converted.
- Savings account – Having an emergency fund to cover unexpected expenses such as medical bills or home & car repairs is mandatory. It’s also important to maintain it, as a savings account will allow you to avoid triggering taxes and penalties when you decide to use your investment and retirement accounts earlier. Or, even better, you might avoid taking on debt to cope with unexpected emergencies.
- Paid-off home – Having a home that is paid off can represent an enormous advantage in retirement. You no longer need to make rent or mortgage payments, which gives you more time and money to spend on other things. Plus, if you ever need extra cash in retirement, owning your home means having lots of options to downsize and pocket the extra cash or take on a reverse mortgage.
- Part-time job – If you’re up for it, you’d have a lot to earn by working part-time in the early part of your retirement years. You’ll meet new people, you’ll get out of the house more, and, naturally, earn more money. By having some money coming in you’ll only delay or take smaller withdrawals from your other retirement savings accounts, which will give you more time to grow.
- Pension – If you’re lucky enough to get a traditional pension in retirement, rest assured that you’ll be safe. Pensions provide retirees with a steady stream of payments that will last for the rest of their life, no matter their life span.
