The Secrets to Retiring Rich and Stress-Free

When it comes to retirement, there are some secrets we can learn from the super rich about living a stress-free and meaningful retirement. At REAP Financial, we help our clients understand the in’s and out’s of preparing for retirement, and that includes building a happy, as well as a wealthy, retirement future. In this article, we’ll go over some of the secrets usually reserved for the ultra-wealthy about how to retire successfully and without stress. Keep reading to uncover these secrets for yourself!

Start as Early as Possible

The first secret to retiring stress-free is starting to save for retirement early. Many people forget that time is one of their most valuable assets in retirement preparation. So much so, it is tempting to push off retirement savings year over year. However, in many cases, the earlier you can start building for retirement, the earlier you can actually retire. Having consistency in your savings is key. If you set your savings on auto-pilot, paying yourself first into your retirement accounts, whether it be a 401K, brokerage account, HSA, or IRA. These accounts will work for you over time, and the sooner you can get started, the less you’ll need to save every month to reach your goals, since time and compounded interest will be working its magic in the background. Consistency is key here! Learn more about common pitfalls in retirement planning.

Another thing to consider is how to change your retirement savings as your paychecks grow. Whenever you get a raise, no matter your age, that’s a great opportunity to update your retirement contributions and automatically increase your retirement contributions. By changing your retirement contributions alongside increases in your income, you’ll barely feel the difference, since you’re accustomed to a lower salary. That approach and consistency will add up and pay big gains over time. Read more about retirement planning insights.

If you’re a little late to the game, in your forties or fifties, it’s not too late! However, since you have less time on your side, you’ll have to do more going forward. If you’re in your forties, a good metric is that you need at least three years’ worth of salaries saved to be on track to retire around 65. If you’re in your 50’s, you need to have around 5 times your salary saved by the time you reach 59 ½ or 60. Once you get into your 60’s, you want 8-11x your salary saved by the time you reach seventy to retire successfully. Those are just a standard rule of thumb, to give you an idea of what to aspire to!

Regardless of your age, setting up a payroll deduction is the easiest way to get in the savings game, since if you don’t see the money, you won’t spend it. If you’re later in the game, perhaps you have kids you’ve been supporting who no longer need your help. That’s another great opportunity to shift the funds you’d be spending on your kids towards your future retirement. Remember, if you don’t see it, you don’t spend it. Explore the impact of 401Ks on retirement planning.

Invest Wisely & Truly Diversify

To retire successfully, you need to invest wisely and truly diversify your portfolio. There are two types of diversification. The first type is asset diversification. We don’t want everything in the same asset class. We want to have a variety of assets. This could include a variety of things, such as cash, real estate, metals (gold, etc.), stocks, various accounts, and more. This is what most people imagine when you say diversification.

The other type we’re talking about is tax diversification. Are you investing in ways that you’ll be able to pull this money out in retirement without losing too much to taxes? For example, if all your savings are in an IRA or 401K, the money will always be taxable as income down the road, when tax rates are potentially higher. If you have brokerage accounts, that money won’t be taxed until you sell those assets. At the time of sale, you’ll likely trigger a capital gains tax if the assets have appreciated. Today, you’d face a tax of around 15-20% on capital gains, whereas many successful retirees will be in a higher income tax bracket, such as 22 – 32%. Then there are banks, money markets, and assets with interest and dividends, which you’ll be paying taxes on every year. Finally, there are Roth IRAs, Roth 401ks, and HSAs, from which, if utilized correctly, your money will come out tax-free forever.

All these different types of tax classes can give you control of your tax bracket long-term in retirement. If you have everything in a traditional IRA or 401K, you may be missing out on a lot of the benefit you’re getting from those accounts, if you’re taxed at an extremely high rate when you withdraw the money. For this reason, you always need to consider your asset diversification and tax diversification hand-in-hand to get the highest benefit. Learn more about required minimum distributions (RMD).

Discuss Your Health Care Plan

Another key aspect of retiring stress-free is discussing your health care plan in advance. There are three health care situations to consider. First, is if you decide to retire before qualifying for Medicare (before age 65). If you retire before that age, you’ll need to budget for buying healthcare in the marketplace. The plans in the marketplace tend to be more expensive than those you’d get through an employer. So, if you plan to retire before you qualify for Medicare, you should budget between $500-900 per month, per person you’re covering for those years before you qualify for Medicare.

The next situation is once you’ve qualified for Medicare at age 65. Once you get on Medicare, it is very comprehensive. Even so, you still may want to get on a supplemental plan or a Medicare advantage plan. You’ll want to seek expert advice in deciding what plan is best for you, since Medicare plans vary across the country. Remember, you want to sign up for Medicare as soon as you are eligible. There is a seven month window, stretching from three months before you turn 65, the month you turn age 65, and three months after, where you can enroll in Medicare and select the plan for you. Make sure you don’t miss this seven-month window, since failing to sign up during this time can result in a late enrollment penalty and delays. Understand how healthcare expenses can affect your retirement.

The last piece of the puzzle is long-term care, such as nursing homes or home health care. It’s likely one of the last things on your mind when you’re early in retirement. However, it is very important and often overlooked in planning. In fact, many people don’t consider how expensive long-term care is until they see what it costs to take care of an ailing parent. We want you to consider these things upfront, when you’re planning your retirement or newly retired. This helps ensure that if you do need long-term care at some point or home health care insurance, you’re set up for success from the beginning, when it is less expensive. The older you get, the more expensive it is to set up. In many saves, successful retirees with REAP Financial have saved enough to self-insure. We don’t want you paying for insurance you don’t need either! Part of our holistic retirement planning services at REAP Financial is to help you look at these issues and help you plan for these health outcomes. Explore the legacy benefits of health savings accounts.

Setting Clear Goals & Budget

This last one may seem simple, but it is extremely important. In pre-retirement or newly in retirement, you need to determine how much your portfolio can sustain and how much you need to maintain your lifestyle. Your budget is the most critical number in retirement. By ensuring you’re not spending too much too early in retirement, you help keep your assets in the market growing for you, so your portfolio lasts longer. You’ll also need to figure out which assets you’ll live on first, to make sure you’re draining your accounts in the right order so you don’t lose your tax diversification through the years. As stated, your budget is the most critical number. In fact, a few hundred dollars extra spent every month can derail a retirement plan, so you need to be on top of your budget. Read about the 4 big retirement tax ambushes and how to avoid them.

Many of you may have identified a number you’re comfortable with, but we don’t want our clients to feel like they have to live on a stringent budget in retirement if you don’t have to. At REAP Financial, a lot of the work we do is in helping families identify what their portfolio can sustain and how much they can spend confidently. This allows you to enjoy your wealth and your retirement. So many families live with unnecessarily tight budgets, simply because they don’t have the guidance on what their portfolio can sustain. You worked hard for your retirement, and you should enjoy it, without the stress of wondering when the money might dry up. Setting clear goals, having a budget, and knowing what level of spend your portfolio can sustain unlocks that stress-free retirement life we all long for.

These simple, yet powerful tips will help you and your family prepare for a successful, stress-free retirement! If you’re interested in more tips and retirement strategies, check out our extensive library of content on YouTube and We suggest starting with this article, which will explain even further why the budget is the most critical number in your retirement portfolio! Explore 6 strategies to keep more of your money in retirement.

Retirement & Financial Planning in Austin, Texas

If you’re seeking a skilled retirement planner in Austin, Texas, connect with our expert team at REAP Financial. We specialize in creating customized retirement strategies tailored to your unique financial goals and lifestyle dreams. Let us guide you through the complexities of retirement and financial planning to ensure a prosperous future for you and your family. Contact us today for a consultation and start your journey toward a peaceful retirement in Austin.

Give us a call at : (512) 249-7300

Our Main Office Address

REAP Financial

9414 Anderson Mill Rd #100

Austin, TX 78729


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