This guest post is provided by Andy Masaki. Andy is a blogger and financial writer associated with the Oak View Law Group. He is a debt expert and a member of several online forums where he shares his advice as well as tips to lead a financially independent life. In this article, he's going to talk about the proper wealth management for a secure and happy retirement.
Many people in our country are losing jobs due to this pandemic. And eventually, they are left with little or no money!
At this point, you might be realizing the importance of an emergency fund and saving money! Likewise, it’s important for saving money for your golden years too. The reason being, after retirement, you won’t get a paycheck like now.
That’s why you need to save a substantial amount. Besides, you need to plan your finances accordingly so that you can relax during your golden years. And the earlier you start planning, the more money you can save for your retirement!
So, precisely, you need to be strategic while planning for your retirement. Here, we have listed some of the best possible ways to secure your retirement with proper wealth management planning!
- Invest in annuities
If you are looking for a steady income after retirement, annuities can be a good option for you! But what exactly is an annuity?
Well, it’s a contract between you and an insurance company. You can invest a lump sum amount or series of payments. And in return, you can receive monthly, quarterly, or yearly payout after a certain time.
You may come across mainly two types of annuities, like:
- Immediate annuities
As the name implies, this type of annuity pays almost immediately. You have to make a lump-sum payment to the insurance company. And the insurance company will assure you of a regular income.
Usually, you can start receiving payments within a month! And if you want, you can change the mode of receiving payment, like, monthly, quarterly, or annually.
- Deferred annuities
If you are looking for long-term savings, deferred annuities can be the best bet for you! It doesn’t offer you almost immediate payment like immediate annuities. So, you can set your payment at a later date, say, after retirement! And guess what?
During that time, your money grows tax-deferred! And there are no IRS contribution limits for most annuities like that of retirement accounts!
Apart from your IRA or 401k, you can stash your money in deferred annuities for a good amount of income after retirement.
Personally, I would suggest you opt for deferred annuities as it provides long-term savings. And hence, it can provide you with a handsome income after retirement. You can opt for a systematic stream of income or a lump-sum payment or make withdrawals whenever needed, after your retirement.
- Create an estate plan
I know that you are working hard to secure your life after retirement. But you know what? It’s equally important to protect your assets even when you are not here!
Yes, you heard it right! And there lies the importance of estate planning. Broadly speaking, it means the planning of your assets will be preserved, managed, and distributed after your incapacitation or death.
If you don’t do estate planning, your assets will go through probate. And in most cases, the probate process is very costly and time-consuming. But, by doing estate planning, it will be convenient for your heirs to inherit the assets after your death.
Secondly, estate planning is all about protecting your loved ones when you are not here. And it includes protecting them from the large bites of Uncle Sam too! Creating an estate plan will protect your beneficiaries from inheritance taxes.
Lastly, you should create a living will and include it in your estate plan. It can help you to make decisions about your medical care if needed in the future.
And give the power of attorney to a trustworthy person, who will be the executor. That person will carry out the instructions according to your will.
- Invest in REITs (Real Estate Investment Trusts)
Managing a property daily might be a cumbersome task for you. In that case, investing in REITs can be a good option to secure your retirement.
Basically, it’s a mutual fund that owns real estate. You can pool your money with others to invest in a collection of properties. And that too without taking the burden of managing those properties!
You can earn a share of the income generated by commercial real estate ownership. You will find mainly 2 types of REITs:
- Equity REIT
In most cases, you will come across equity REITs that own or operate commercial properties like apartments, office buildings, shopping malls, etc.
- Mortgage REIT
It mainly owns the mortgage and mortgage-backed securities of various properties. And thereby these types of REITs earn income from the interest on these investments.
Well, most of the REITs are publicly traded on the stock exchange, known as publicly-traded REITs.
But you may also find some REITs that are not listed on the stock exchange, known as public non-traded REITs.
So, before investing, make sure you gather enough information about the REIT and proceed further.
- Get rid of your debts asap!
A rule of thumb says that you should have at least 75% of your pre-retirement income to relax during your golden years!
But if you retire with a large number of debts, then it’s enough to drain away all your savings! Yes, you heard it right!
Gradually, you might feel that getting out of debt is hard, especially after retirement.
Try to pay off your debts asap, especially if you have unsecured debts like credit cards! The reason behind this is the high-interest rates and other associated charges! The more you wait, the higher your outstanding balance will be!
Once your account becomes delinquent, most likely, it will go for collections! And trust me, buddy, the debt collectors try their best to squeeze out as much as possible from you. Besides, they might try to pressurize you for making the payment and might threaten you with wage garnishment.
If you feel that your rights under the FDCPA (Fair Debt Collection Practices Act) are violated, you can report the issue!
But the bitter truth is, your debts won’t be erased. Your outstanding balance amount will increase incessantly. And in the meantime, the debt collectors might sue you in court!
You can look for ways to get relief from debt collectors and thereby, get rid of your debts and incessant collection calls!
Another option will be to contact Financial Rescue and apply for their Debt Relief program. Pay off your debts asap and save more for your retirement. The interest payments can become obstacles to your saving process!
The bottom line is, you need to be strategic for securing your retirement with wealth management planning. And hopefully, the above tips will help you to do that!
Don’t forget to let us know about your feedback or experience in the comment section.