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It is important that you understand prior to your retirement that there are things that you must do—if you want to enjoy the lifestyle that you desire during your retirement years.

If you see yourself playing golf, pursuing a topic that has really intrigued you, or volunteering for one of your favorite causes—you must ensure that your retirement accounts are properly funded when you retire—so that you can do what you desire—during your retirement years.

You must do your planning on the front end—if your goal is to really enjoy your retirement years!  Many retirees often underestimate the amount of income they will have available—or underestimate the amount of expenses that they will have in their retirement years.  

Be sure to navigate our "credit page" now so that you can avoid that scenario—you can do so effectively—and at no cost to you!

Below we will list areas of retirement that have been a problem for many—and are areas that you must address—prior to your retirement—and then expand on what you can do now—to address those areas appropriately!

  • Not budgeting enough for retirement—65%-75% of your current income may not be enough—it depends on your goals

  •  Health Care costs are rising—and may be more than you expect

  •  You must understand that you will have to pay taxes on your retirement income

  •  Be sure you understand what you will spend on an annual basis—during your retirement years

  •  Be aware that in many cases you will have to pay taxes on some of your Social Security earnings

  •  The need to provide income for your spouse if you were to transition unexpectedly

  • The need to provide for other family members such as your kids and/or parents


You must understand that if you plan on golfing, providing perks for your kids and grand-kids, traveling abroad—or any other goal that you may have—it requires that you accurately calculate the “number” that you need to attain—to do just that!

You can’t depend on traditional benchmarks—it truly depends on your specific goals that you have for yourself and your family!

If you anticipate that you will need $40,000 per year to do what you  enjoy doing during your retirementyou must have a real plan of action to get to that number—so that you can have the funds that you need for the time that you expect to be alive after you retire. 

If you plan on living for 30 years after you retire—you will need 30 times $40,000 or approximately 1.2 million in your account by the time you retire.

Likewise if you anticipate that you will need $80,000 per year to live at the level that you desire—you will need 30 times $80,000 or approximately 2.4 million in your account by the time you retire. 

Keep in mind that both of the above figures would be reduced if you were to receive Social Security or RRB retirement benefits.  In that case you would reduce the amount that you would need annually by the amount of Social Security that you would receive annually.

In the first example if  you were to receive $10,000 annually from Social Security and you need $40,000 annually to live at the level that you desire—you would now multiply what you needed at retirement as 30 times $30,000 per year and you would therefore only need approximately $900,000 by the time you retire.

In the second example if  you were to receive $20,000 annually from Social Security and you needed $80,000 annually to live at the level that you desireyou would now multiply what you needed at retirement as 30 times $60,000 per year and you would therefore only need approximately 1.8 million by the time you retire.


It is important that you realize that health care costs for pre-retirees—and retirees are in many cases at a high level.

Although you may be able to obtain Medicare at age 65you will still have to pay Part B Medical insurance of over $100 per month plus an annual deductible.  In addition dental services are not covered.  If you are age 65 and you receive Medicare your out of pocket expenses could still be well over a quarter million dollars!

If you factor LTC (Long-Term Care) insurance into the calculation—the figure gets even more absurd.

If you retire at age 62 and live to one-hundred years of age—your health care costs could easily approach a half-million dollars.

Be sure you have realistic projections of your health care costs during your retirement yearsand be sure you have a plan in place nowto meet those rising costs during your retirement years.


If you withdraw money from a traditional IRA or 401K or certain other retirement accounts—you would have to have a plan of action to pay the taxes on them.

If you were to withdraw money from a tax deferred account during your retirement years—expect to pay taxes at your ordinary income tax rate!

Always realize that you can keep your retirement money in a tax-deferred retirement account until you hit age 70.5!

If you have qualified ROTH IRA withdrawals you would pay no tax on withdrawals and earnings—during your retirement years—and there are no mandatory withdrawals.

Therefore, depending on your unique  situationit may be wise to cash in your bond and certificates of deposits or CD's prior to taking the mandatory withdrawals from your retirement accounts. 

You can then go and take withdrawals from your taxable investment accounts to take advantage of capital gains and losses to help reduce or offset your taxes (you can deduct $3,000 per year in capital losses against capital gains and carry forward any remaining losses to future years).

If your traditional IRA did not require mandatory withdrawalsyou would now do so if you were at the age (70.5) where it was requiredand finally if you had to have additional money to live at the level that you desireyou would tap into your Roth IRA (keep in mind that there are no mandatory withdrawals with a Roth IRA so you could continue to build wealth in this account if you had no need for the funds).


Company perks that you once took for granted may not be available during your retirement years.  Your other family members may need you to assist them with their living expenses.  

Will you be under-prepared
—or over-prepared?

Social Security Taxes may apply to you:

Depending on your income and filing status—you may owe taxes on your social security and/or retirement earnings…so be sure you have an idea of how your tax situation will affect your spending habits during your retirement years—prior to your retirement years.

You can go to to get an estimate of your Social Security monthly income that you can expect during retirement!


A critical component to protecting your assets…be sure you have a plan in place to pass down your and your spouse's assets.

Always consider the possible reduction of income due to death or disability.

In addition you must always realize that miscalculations on what is needed for retirement happen on a consistent basis due to consumers not understanding what they need to saveand in many cases not earning enough to save.  If that applies to you be sure to start on a path to correct that at the earliest point possible in your "life stage." 

Be sure to start earlyand avoid starting in your 40's and 50's like so many others doand be sure that you put you prioritize your retirement needs in the appropriate manner.  Your retirement is very important and it should be approached in a serious and consistent manner! 

Never Let Retirement Planning Intimidate You

Don't let what appears to be complex (saving for your retirement) intimidate you by the vast number of choices that you have. 

Quite simply, start with your 401k or other retirement plan that is offered and contribute at least to the match (you must realize that you may have to contribute more and more (possibly 15% to 20%) to this account depending on what the "retirement number" that you have budgeted for mentioned above isand your other sources of retirement income).

You must then—reduce or eliminate your debt to an acceptable levelproperly establish an emergency fundsave in other tax advantaged accounts after that such as IRA'sand then save outside of your retirement account if you have the discretionary income to do so! 

It is really just that simplehowever diversification, consistency in approach (you must re-balance at least annually), focus of thought and a real commitment on your part will be necessary.

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About This Article:


The above article was written by Thomas (TJ) UnderwoodThomas (TJ) Underwood is a former fee-only financial planner, a former top producing loan processor and is currently a licensed real estate broker in the state of Georgia. 

He is the writer behind The Real Estate & Finance 360 Degrees Series of Books that include The Wealth Increaser, Home Buyer 411 The Smart Guide to Buying Your Home, Home Seller 411 The Smart Guide to Selling Your Home, and  Managing & Improving Your Credit & Finances for this MILLENNIUM.

In addition he is also the writer who created The 3 Step Structured Approach to Managing Your Finances, and CREDIT & FINANCE IMPROVEMENT MADE EASY—NEW GUIDE that you can download right now "(at MIMIMAL cost $3.95)" to learn more about his writing style and how you can achieve "more" success in the current economy.

He is the creator of where he regularly blogs about helping consumers improve their credit, finance and real estate pursuits in an intelligent, consistent and proactive manner. 

He’s always looking for ways to make intelligent finance improvement happen for those who “sincerely desire” success in their future. He was the first financial planner to coin the phrase "financially alert mind"  and he consistently writes in a style that is designed to provide consumers the ability to take control of their lives and achieve great results.

You can contact him from a number of sources but the most direct way is to contact him through the contact us block that can be found at the bottom of this page.  You can also get highly relevant tips on "living your life more abundantly" and link to and possibly earn revenue by logging on to

He is also an IRS registered tax planning professional with over 30 years of tax experience and can be reached at:



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