Retirement Income Sources
You may receive some retirement income from Social Security or perhaps from a pension, in addition to what you save yourself. Your retirement plan begins with understanding how much baseline income you will receive. Here are some common sources of income.
Spending from Retirement Savings
How much income can you expect from your retirement savings? A general rule is that your savings will last for 30 years if you withdraw 4% annually and adjust for inflation. This looks like the following in our example.
Can I Live Off Interest?
Some may wish to rely on the interest earned on bank deposits and spend only that. In this case, the principal is untouched, and you can use those funds as needed and pass them on to your heirs. However, living off interest requires a significant amount of money.
Preparing for Healthcare Costs
Upon your retirement, your responsibility is usually to cover 100% of your health insurance. This can come as an unexpected addition if your employer had covered some or all of those costs. A couple aged 65 should expect to spend $295,000 out of pocket on healthcare in retirement, according to Fidelity Investments, and this figure does not include potential long-term care costs. Note that $300,000 doesn’t leave much wiggle room if you face high medical expenses.
What About Taxes in Retirement?
It’s important to estimate taxes in your detailed retirement plan. Expect to pay income tax when withdrawing those funds if your money is in a traditional retirement account.
Potential Benefits and Risks
You can improve your chances of success if you understand the challenges of retiring with $300,000 and follow the rule that generates 4%. * Retiring with $300,000 may allow couples to spend $48,000 annually in our example, or about $37,000 after healthcare expenses.
Is Retiring with $300,000 Realistic?
Regardless of how much money you have
Source: https://www.thebalancemoney.com/how-to-retire-on-usd300-000-5089776
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