The durable power of attorney is a legal document that allows a trusted person to act in your place if you're incapacitated. If you are unable to act on your own due to accident or illness, they can step in to take action for you. They can pay bills, or control investments, or even make decisions about health care issues.
What are required minimum distributions and how are they determined? Beginning at age 70.5, you must begin to withdraw money from your retirement accounts every year. The amount is determined based on your life expectancy as contained in the IRS tables. Required minimum distributions are computed by dividing the account balance at year-end by the life expectancy factor.
As life expectancy has grown, your retirement now can last between 20 and 30 years. So Social Security planning is critical, no matter how much money you have. It can make a difference of hundreds of thousands of dollars. For example, if you retire at age 62 and pass away at age 86, you’ll receive at least 25% less for 24 years. But, if you wait to retire at age 70, you’ll receive 32% more for 16 years. If your retirement income at age 66 was $2,000 per month, this could be a difference of over $200,000 during your lifetime.
If you're like most people, most of the time, you focus your financial efforts on maximizing your current income. But it's also important to plan ahead for the benefit of your spouse if you should pass away. Here are some tips on how to do that.
You might be asking yourself, "When should I retire? Should I retire early or defer it?" Deciding when to retire may not be just one decision, but a series of decisions and calculations. For example, you’ll need to estimate not only your anticipated expenses but also what sources of retirement income you’ll have and how long you’ll need your retirement savings to last.
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