Can You Save Too Much Money for Retirement?
Saving too much for retirement is such a contrary notion – especially today, when it has been estimated that Baby Boomers have lost 45% of their net worth in the last five years.
However, it is possible to save too much. We have been taught to spend our pre-retirement years maxing out contributions to 401(k)s and IRAs in order to save on taxes. However, much of the tax breaks we enjoy while we are employed no longer are available to us upon retirement. And if we find ourselves needing less money than we saved, Uncle Sam requires us to start taking the money out and – surprise – gets a nice big chunk of it.
Thus, the taxes we spent so many years deferring now come back to haunt us in our golden years. Not what most of us planned on!
Which is why retirement planning is essential, and the sooner the better in terms of years left before you retire. Getting a handle on how much you will really need to retire comfortably is key to managing your retirement funds. Because you may not need as much as you think.
Once you retire, you will no longer be paying Social Security taxes. You won’t be making contributions to a retirement account. And you should rethink paying off that mortgage, since mortgage interest is one of the biggest deductions available for personal income taxes.
And even if you are able to live off other income while your tax-deferred income languishes in your retirement accounts, your heirs may have to pay a hefty price once you’re gone.
Need to learn more about protecting your family through careful estate planning? Contact our Jacksonville Florida estate planning law firm.
