As we move toward the end of the year, it’s a good time for you who are retired to check-in on your spending plans. Here are some reasons why.
Inflation has been the hot topic for the past couple of years. Unfortunately, inflation can erode the purchasing power of your retirement savings over time. A review allows you to adjust your spending plan to account for inflation and ensure your retirement income is sufficient to cover rising costs.
Unexpected expenses such as home repairs, vehicle purchases, or other unforeseen costs may disrupt your spending plan. A review helps you to identify any shortfalls and adjust your spending accordingly.
Market fluctuations may impact your spending when you are retired because you may have some investments exposed to market fluctuations. A check-in allows you to assess your portfolio’s performance and adjust, if necessary.
Income sources may change in retirement. Social Security, annuities, pensions, IRAs, 401(k)s, trusts, brokerage accounts, rental properties, and more: how do you source your income in retirement? What are the tax implications of these income sources?
Each of the mentioned reasons may have tax-planning implications. Inflation and unexpected expenses may trigger actions like selling appreciated securities or withdrawing a larger-than-expected amount from your retirement portfolio. What’s more, the tax treatment of income isn’t one-size-fits all. Different types of income are taxed differently which means that your tax bill may also be impacted.
Now is the time to talk with your financial professional about your spending year-to-date so you may explore tax-planning opportunities and act, if needed.
Wendolyn Forbes is a CERTIFIED FINANCIAL PLANNER™ with Wealth Transition Finance, A Member of Advisory Services Network, LLC. Wendolyn is a fee-only financial planner and member of the National Association of Personal Financial Advisors (NAPFA). For more information call her at (828) 734.4868.
CFP Board owns the marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the U.S.
This material is provided as a courtesy and for educational purposes only. Advisory Services Network, LLC does not provide tax or legal advice. The information contained herein is general and is not exhaustive by nature. Federal and state laws are complex and constantly changing. Consult your own legal or tax professional for information concerning your individual situation.
Originally published in the October 2024 issue of Positively Haywood.