Why You Should Think Travel and Retirement
Retirement is a period of life that many Americans look forward to. There are many ways that people can spend their retirements. One of the great options that people endeavor to take part in is traveling, often visiting family and exploring some new and exotic locales. While spending time with family across town may have negligible costs, some travels might take a bit more in the way of financing. For example, if you’d like to take a trip across Europe or scale the Great Wall of China, it will cost quite a bit of money. This is where proper planning can come into play.
Where to Go?
There’s truth to the saying “the sky’s the limit.” If traveling is how you want to spend your retirement days, then there’s no place you can’t go. Whether you prefer to travel by plane, train or automobile, the world is yours to explore. Make a list of where you and your partner want to visit. Maybe you’ve always wanted to drive across Route 66 in a convertible, or your spouse wants to visit Ireland in the springtime. Wherever it is, the best plans start with a single step.
Of course, to get to these places, you’ll need to adequately plan for the future to achieve the success that you’d probably like to see for your golden years. The time to start planning is as early as possible. If you haven’t begun this process, now is the time to start.
To make sure that your money is able to return as much as possible, it’s important to look at the bite that taxes might take from your bank account. There are ways to manage how much tax you’ll have to pay while retired, and it’s also possible to manage how much tax you’ll have to pay in the present. Retirement tax planning can save you a lot of money in the future.
Many savings vehicles will allow you to defer paying taxes. Popular accounts like the 401k or the traditional IRA are tax-deferred savings accounts. In other words, investors can remove the money that’s put toward these accounts from their current tax bill. There are limits to how much people can save in a given year, but as long as they save no more than the maximum, every dollar goes toward cutting taxable income. Of course, retirees will have to pay taxes when they take the money out, but on the brighter side, if their income is low enough, they might be able to avoid paying taxes at all.
If you’re looking to have higher income during retirement than you do while working, it might be a good idea to pay the tax today and opt for a Roth account. This option allows for contributions to grow tax free. Withdrawals are also tax-free as long as they are taken after the retiree hits 59.5 years of age.
Other Options to Free up Money
It might also be a good idea to free up even more money to retire comfortably and allow you to travel at will. Many Americans buy large homes while they have children living with them. Once the kids fly the coop and the parents become empty nesters, however, a large home is not as necessary. By selling a house and downsizing, it might be possible to access tens, if not hundreds of thousands of dollars of equity that you can put toward funding your golden years and that travel fund. This is also a great time to declutter and get rid of the “stuff” you’ve collected over the years. Some of this might be sentimental, but much of it is probably unnecessary to hold onto. Some items you might want to gift to your children or grandchildren now, instead of worrying about dealing with it in your will. Remember, one man’s trash is another man’s treasure, so getting rid of clutter can actually bring in even more money.
Decide now how you want to spend your Golden Years. If travel is at the top of your list, properly planning for these years is important. Cutting down on taxes and saving for the future will allow you to enjoy family and travel to the ends of the earth, or across the country. Making sure that you’ve properly planned can go a long way to achieving those dreams.