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  • Kiena Lee

5 Most Financially Important Areas to Stop Ignoring

In this article series, I share excerpts from my book, Divine Secrets of Affluent Women: The Guide To Owning Your Wealth. I hope you enjoy this post — if you like to connect, you can reach me via email or connect with me on social: Instagram, Twitter, Facebook. Also, you can also find my book on Amazon — here is the link to purchase the Kindle version.




Have you saved enough for retirement?


If you haven’t already been saving and investing your money, looking at your financial future can feel scary and worrisome.


Let’s dive deeper into numbers:


1. Do you have a retirement income plan? Where will your money come from? Check what retirement savings and sources of income you can count on. Confirm the following sources for income:


2. Social Security: When you are age sixty-one and nine months old, you can apply for Social Security benefits. You can get estimates of your retirement, disability, and survivors’ benefits online by creating an account. Once you have an account, determine your benefit estimate, earnings statement, and Medicare taxes you have paid. Keep in mind that the full retirement age is sixty-seven. If you start taking social security at age sixty-two, you will receive 25 percent less than the amount at age sixty-seven. Additionally, your annual cost of living adjustments will be based on a smaller figure (retired income versus working income.) If you wait until age seventy, you will receive 32 percent more than age sixty-seven. Thus, the longer you wait, the more money you will get from social security. Every year, changes are made to social security. Be sure to check for new changes annually.


3. Pension: Do you have a pension from an employer? Generally, the employer makes contributions on your behalf. Your worker’s pension payments are determined by the length of your working years and the annual income you earned on the job leading up to your retirement. However, your pension payment will be the same every year, because there are no cost-of-living adjustments. Take our fashionista Emmy’s example. Even though Emmy worked for non-profit organizations her entire career, some of her employers provided a pension, which allowed Emmy to take the income at age sixty.


4. Do you have an Individual Retirement Account [IRA]? When you withdraw money from your IRA, you will pay federal and state taxes, because contributions made were pre-taxed. When Emmy retired at age sixty, she could withdraw money from her IRA and have federal and state taxes withheld.


5. Do you have a Defined Contribution plan such as a 401k, 403B, or 457? These are retirement savings plans offered by employers. Your contributions made to the plan are tax-deductible and may lower your income tax bracket while your investment grows tax-deferred. Some employers will match a certain portion of your contributions. This is the free money that our fashionista Emmy refers to. However, when you withdraw money from any Defined Contribution plans, you will pay federal and state taxes.


6. Do you have a Roth IRA? In a Roth IRA, you pay the income tax upfront, but distributions made after age 59½ from accounts that are at least five years old are tax-free. If you expect to be in a higher tax bracket in retirement, it makes sense to pre-pay the tax using a Roth account.


7. How much savings do you have?


8. Do you have any Guaranteed Income Annuities? These annuities provide a guaranteed income or a fixed payment when you retire. You can choose to receive monthly, quarterly, or annual payments.


9. How much income do your investments generate without touching your principal? Keep in mind that you will pay capital gains taxes when you sell your assets for a profit.


Even though retirement may seem far off, now is an opportune time for you to make financial decisions that can set you up for the rest of your life. Think about it. You want to be prepared in advance when it comes to finances. This way, when you have to deal with financial issues, you’re already set up so it won’t affect your current quality of life. Knowing what’s coming up, what you’re up against, or what your risks are helps you to plan. And when it’s done right, this plan can essentially give you control over your financial future. Keep it simple. Focus on the five most important areas of your life:


1. Earnings — These are your peak earning years. Maximize your contributions to your retirement plan.


2. Spending — How can you more closely watch your spending so you can save and invest more money?


3. Investing — Set up a financial timeline to make sure you’re getting the most out of all your investments.


4. Insurance — Proper coverage that protects you is imperative.


5. Legal Issues — You’ll want to have the right paperwork in place to be sure all your wishes around health, wealth, and quality of life are honored.


Time is of the essence. You are in charge of your own destiny. Plan your financial future now. For more information, you can find my book on Amazon — here is the link to purchase the Kindle version.

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