Retire Rich Even If You Aren’t Wealthy

(ARA) - Retirement isn’t what it used to be. And that’s a good thing. It used to be that retirement was about what you quit doing. But these days retirement is about creating new opportunities and making the most of your plans.

“If you believe all the marketing, retirement is something you pay cash for on your 65th birthday, and the ads claim that if you don’t have stockpiles of money by that time, you might as well forget about it,” says Suzanne Olson, editor and spokesperson for IHateFinancialPlanning.com. “There’s a lot more to retirement than hoping you have enough money saved to live through it.”

The Web site for people who love money but hate to plan, IHateFinancialPlanning.com takes a different approach to retirement planning. “We do encourage people to save as much money as they can, but we don’t believe there’s a certain figure they need to obtain or a deadline for making retirement happen,” adds Olson.

The key is to plan for the sort of retirement you envision and set about making your plan happen. “Retirees are approaching their futures with more creativity than ever, and as more boomers retire, their solutions are only going to get better,” Olson says. “It won’t be long before we quit using phrases like ‘early retirement’ because they will no longer be relevant.”

IHateFinancialPlanning.com suggests the following ways retirees can enrich both their lives and their financial circumstances throughout retirement, no matter what their age.

Plan ahead: Think early and often about retirement and what it could mean for you. If you plan to relocate, for example, find out which states impose an income tax on residents and which do not. Then decide if that will affect your dream for a destination. Do your dreams of world travel correspond with your bank balance? Either way, there’s still time to manage those expectations. The more you plan now, the better your future can be.

Keep working: Get a part-time job, open your dream business or become a consultant. What would it take to turn your hobby into a moneymaker? These are income-producing options that allow you to stay in the rat race but run on a different track.

Hold off Uncle Sam: Just because you can begin collecting Social Security retirement benefits at 62 doesn’t mean you should. You aren’t eligible for full benefits until you reach full retirement age, so you could collect less long term if you start as soon as possible. Full retirement age for baby boomers born after 1943 is 66, and it’s 67 for anyone born after 1960. Plus, half those benefits may be subject to income tax if your other income puts you over certain thresholds.

Let investments keep working: Don’t assume that your investments will stop working just because you do. If you plan ahead, you can draw on other money first and leave income tax-deferred accounts alone until you’re required to start withdrawing funds, usually about age 70 1/2. Under current law there are options, such as the Roth IRA, that don’t have withdrawal deadlines.

Use your house: Many homeowners are living in their biggest asset. Consider selling yours and buying or renting a home that costs less. Federal law allows you to pocket up to $250,000 in tax-free profit ($500,000 for married couples) on the sale of your home--a tidy sum to add to your nest egg. If you want to stay in your house, consider a reverse mortgage, the loan homeowners 62 and older can use to borrow on home equity with no payment due until you leave the house for good.

Pay debts: Enter the retirement phase of your life with as little debt as possible. Pay off any credit card or other consumer debts you may have while you’re planning for retirement instead of while you’re living in retirement.

Pay attention: Be sure to factor in things you can’t control -- taxes and inflation -- when considering your retirement aspirations. They can be overcome, by the way, but you need to be aware that your dollar may not be worth the entire buck after taxes and inflation take hold of it.

Be prepared: Before you retire, find out what you need to know about your employer-sponsored retirement plan, health insurance options, Medicare, your insurance policies and the like. Conduct an insurance check-up to determine how your needs now compare with what they’ll be in the future. You may no longer need disability income insurance, but what about long-term care coverage? What you learn may have an impact on your timeline and goals, so it’s best to uncover potential surprises before it’s too late. Web sites such as IHateFinancialPlanning.com can be a resource for topics, calculators and other tools.