Retiring Within 5 Years? Do These Things Now
Retirement is an exciting milestone to look forward to, and if you're within five years of it, you may already have your own little countdown going. But before you leave the workforce for good, make sure to check these important items off your list.
Are you happy with the way your savings look? You may think you've socked away a bundle, but remember, if you withdraw from your savings at an annual rate of 3% to 5%, it may provide less annual income than you'd expect (and for many people, going above 5% on an annual basis could mean running out of money prematurely).
Say you're sitting on a $500,000 IRA or 401(k) plan balance. That sure looks like a lot of cash. But at the aforementioned withdrawal rates, it's just $15,000 to $25,000 of annual income, and unless you have a Roth IRA or 401(k), you won't even get to keep all of that money as you'll lose some of it to taxes. As such, if retirement is near, you may want to take the opportunity to boost your nest egg. Once you're 50, you can make catch-up contributions in your retirement plan that bring your annual limits up to $7,000 in an IRA and $26,000 in a 401(k).
Source Fool.com
