Saving to live on a fixed income is among the financial preparations people know they need to make before retiring.
But there are others to take into account.
The Motley Fool put together a list of money-related things you need to look out for when retiring. Here are two key things.
Choosing a safe withdrawal rate
A safe withdrawal rate is what helps you determine how much money you are able to withdraw from your account annually without running out of money, according to Investopedia.
Fidelity says not to withdraw more than 4% to 5% of your savings in your first retirement year. Afterward, adjust that amount each year for inflation.
“John retires at age 67 with $500,000 in retirement accounts,” the website said in a hypothetical example. “He decides to withdraw 4%, or $20,000, each year for expenses. Since John plans on withdrawing an equivalent inflation-adjusted amount from savings throughout his retirement, this $20,000 serves as his baseline for the years ahead. Each year, he increases that amount by inflation—regardless of what happens to the market and the value of his investments.”
Know the tax rules
Understanding how your retirement income is taxed is imperative. Such income includes payments from Social Security, pension and your retirement accounts. Georgians don’t have to worry about Social Security taxes . SSI benefits (and Railroad Retirement payments) are exempt from state income tax. Residents 65 and older are offered a maximum deduction of $65,000 per person on all kinds of retirement income, according to SmartAsset.
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