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5 Tips to Maximize Savings for Retirement
NewsJune 01, 2022
There is no one-size-fits-all when it comes to saving and investment strategies. However, there are best practices that can help you achieve your financial goals while minimizing risk. Here’s some tips on how to make the best financial decisions for your retirement nest egg.
Saving for retirement is one of the best financial strategies you can take part in. Everyone will hopefully retire at some point in their lifetime. Saving early on in life for your golden years will help prevent you from running out of money. Whether you’re on track for retirement or need to catch up, a Fiduciary financial advisor can help prepare you for your later years.
Here’s a look at 5 saving and investing tips that will help you maximize your savings for retirement.
What is a Retirement Savings Plan?
Having a retirement savings plan is essential to securing your financial security later in life. By utilizing various retirement savings accounts, you can maximize your tax savings, invest in the index funds, and take advantage of compound interest — leaving you with more money when the time comes to retire.
Take Advantage of Your 401(k) or 403(b) Company Match
401(k) and 403(b) plans are qualified tax-advantaged retirement plans offered by employers to their employees. If your workplace offers a retirement plan and a company match, it’s always best practice to contribute up to the maximum your company offers. It is financially beneficial to take advantage of your 401(k) or 403(b) early on in your career.
401(k) plans are offered by for-profit companies to eligible employees who contribute pre or post-tax money through payroll deduction. 403(b) plans are offered to employees of non-profit organizations and the government. You should always see what kind of retirement packages are offered with the company you work for to see where you can better invest and save your money.
Apply for Retirement Savings Credits
If you are a lower- or middle-income taxpayer, you may claim a saver’s tax credit for up to 50% of your retirement plan contribution. If you are married and filing jointly with an adjusted gross income (AGI) of below $68,000 for 2022 ($66,000 for 2021), and you contribute to a qualified retirement plan, you may be eligible for a tax credit.
The income limit for heads of household is $51,000 for 2022 and for single filers and married persons filing separately is $34,000.The maximum credit for 2021 and 2022 is $2,000 for married couples filing jointly and $1,000 for single filers (applied against the maximum contribution amounts: $4,000 for married couples filing jointly and $2,000 for single filers.
Contribute to a Health Savings Account
Healthcare costs are one of the highest growing expenses in the country. High-deductible health plans and health savings accounts are a golden retirement planning opportunity. This tool can not only be used to pay for healthcare expenses but can also be used to squirrel away additional funds for retirement.
Contributions are 100% tax-deductible, and funds unused for medical expenses may continue to be invested and grow over time. One of the best things about an HSA plan is that the distributions made on qualified medical expenses are tax-exempt. People over the age of 55 can keep and save an additional $1,000 per year. It’s important to remember that a traditional IRA is funded with pre-tax dollars whereas a Roth IRA is funded with after-tax dollars. Choose the one that works best for your tax situation.
Use the Backdoor Roth IRA to Increase Savings
For 2022, the AGI phase-out contribution range for Roth IRAs for married couples filing jointly is $204,000 to $214,000 and for single taxpayers and heads of households is $129,000 to $144,000. If your current income is too high and makes you ineligible to contribute to a Roth IRA, there’s another way in. First, contribute to a traditional IRA. There is no income ceiling for contributions to a non-deductible traditional IRA, although there is a limit to what can be contributed.
The IRS caps the contribution limit to $6,000 or $7,000 if you are 50 or over.After the funds clear, convert the traditional IRA to a Roth IRA. That way the funds can compound for the future and be withdrawn tax-free, as long as you meet the withdrawal guidelines.
Retire in the Right State
When it comes time to retire, you should look and see what states don’t have state income taxes. Alaska, Florida, South Dakota, New Hampshire, Tennessee, Wyoming, Texas, and Nevada are just some of the states that don’t have state income taxes. Colorado routinely ranks among the top tax-friendly states for retirees. The state income tax range is a low, flat rate of 4.63%, and you get a fair deduction on retirement income.
A good thing to note is that a majority of states don’t tax social security. Before packing up and moving, evaluate all of the taxes in your proposed new home state.
Fund Your Retirement Accounts with Side Hustles
Side jobs can be an excellent way to make money. Instead of using this cash to purchase a new car or upgrade your appliances, consider using it to fund your retirement accounts. If you haven’t maxed out your IRA contribution, this would be a great option.
Whether you are flipping furniture, tutoring students, or completing freelance work, using side hustles to save money for retirement can be a great way to save money and jump start your retirement investments.
Last Thoughts
It’s important to look at your retirement plan and see if any of our tips could maximize your savings. If you’re like most people, qualified-retirement plans, Social Security, personal savings and investments are expected to play a role. Once you have estimated the amount of money you may need for relocating in retirement, a sound approach involves taking a close look at your potential retirement-income sources.
At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions that come up during your retirement process. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.
For more information on our retirement and financial planning services, contact us here today.
What is a Phased Retirement?
NewsMarch 31, 2022
When it comes to retirement, the conversation is usually about money. Did you save enough? Did you start saving on time? Will it be enough to cover your expenses? Many retirees are taking the stress out of these concerns by choosing a phased retirement. But what is phased retirement, exactly? Let’s take a look…
When you begin preparing for retirement you slowly begin to ease into your new lifestyle. Such as activities you used to enjoy before you worked 9-5 everyday. No one likes sudden change, most of us think about retirement as a transition. If you like transitioning into life changes, a phased retirement may be for you.
What is a Phased Retirement?
Phased retirement is just like it sounds – a path towards retirement where you slowly begin taking more vacations, working fewer hours and essentially becoming part-time on your own time.
There’s a commonly stated stat that proclaims that about 10,000 Baby Boomers hit retirement age every day in the US. That means that they are now eligible for retirement. Despite the fact that retirement is changing – Boomers are working far longer than other generations who reach retirement age – the fact remains that Boomers are starting to make a big exit from the workforce, taking a lot of their skills, knowledge, and proven leadership skills with them.
The phased method is gaining momentum due to this reason and several others; One being people are living longer, for financial and personal reasons they may need to phase into retirement to keep a steady stream of income that will last 20+ years. The second reason being jobs are becoming less manual and can be performed at home. The pandemic was a great indicator of this. Lastly, more employers are becoming more accommodating towards phased employee exits due to baby boomers reaching retirement.
New Shift in Retirement Trends
The idea of retirement shifted from working until you’re 65, to completely stopping work and living off your savings, pension and Social Security until you die. As of late, the whole paradigm has shifted. Some individuals want to be financially independent and retire early, where they save and invest carefully now so they can enjoy a long retirement while young enough to appreciate it.
People on the other end of that spectrum may find their careers to be satisfying enough that they plan to work their whole lives. Realistically, both these retirement goals may end up utilizing some kind of phased retirement. Regardless of the many reasons one may have, a phased retirement should be considered as a future retiree’s plan. The reasons can be both financial and emotional, however, they both bear consideration, even if it’s only a backup retirement strategy.
Pros and Cons of a Phased Retirement
This alternative to the traditional here-today, gone-tomorrow method of leaving one’s job has become fairly popular among Baby Boomers in recent years. But before you make a decision on whether to embark on this transitioning journey, be sure to know both the benefits and drawbacks of a phased retirement.
The Main Financial Motivators
The two main financial motivators in retirement are driven by government benefits: Medicare and Social Security. Both have age considerations. Medicare doesn’t happen until age 65 and Social Security shouldn’t happen until at least age 67 – which is considered full retirement age.
So what happens if you want to retire earlier than these ages? You may consider phasing out of work rather than just quitting. This way you can afford to live comfortably before your government benefits kick in.
The Main Personal Motivators
Why should you consider a phased approach to retiring? One reason might be that you haven’t been retired before, and a phased approach allows you ease into your golden years. Phased retirement can give you a chance to try things before 100% committing. It’s important to remember that retirement is not a one size fits all plan, and it looks different for everyone based on their needs.
With phasing intoretirement, you can test how retirement will work for you. Specifically, by leaving your current job, and potentially finding a job that involves less hours, less stress, or fewer commitments. You can see if you really want to take on your beloved hobby that much. Or you can take on some of the volunteer work you’ve wanted to do for years, and see how you handle having more time on your hands.
Further Pros:
Financial stability. During phased retirement, workers can still collect a paycheck, just for less money. They can supplement their pay with withdrawals from company-sponsored retirement plans if necessary.
Problems a Phased Retirement
While phased retirement offers a slew of positives for your business, there are quite a few downsides that your plan will have to address if you want it to be successful:
So, with a phased retirement program, retirees can slowly make the switch instead of abruptly changing their entire lives. But there are many laws, regulations, and other compliance issues that need to be addressed before implementing a plan and plans need to be flexible enough to ensure that they do not impact other benefits. With all of that, phased retirement can be great if a company wants to go through the motions of creating one and it suits your retirement outlook.
Final Thoughts
Phased retirement is a concept, not a particular legal or employment status. Your employer may be willing to let you work reduced hours, cut out stressful job responsibilities, or time-share with another employee. Whatever the case may be, attention should be brought upon the details of the transition. Cutting back on hours could be ideal unless it disqualifies you for your company’s health insurance or other benefits.
Whatever your retirement strategy, there are risks to identify and manage as you navigate retired life. One key factor remains the same: the more you prepare, the less surprises you’ll face along the way.
At Agemy Financial Strategies, our first priority is helping you take care of yourself and your family. Click here to connect a convenient time for your complimentary 30 minute consultation. Our Fiduciary financial advisors in Guildford, CT and Denver, CO are looking forward to speaking with you.
A Financial Crisis is a Retirement Crisis. Here’s How to Prepare.
NewsMay 18, 2022
Crises during retirement can come in many forms: recession, divorce, pandemic, catastrophic medical expenses, natural disaster, disability, care for an elderly family member, or loss of an income source. However, we’re here to assure you that you can retire during a financial crisis, you’ll just need to prepare yourself.
The thought of being hit with a major negative event that could affect your finances can keep anyone awake at night. After bolstering savings, paying down debt, building up cash, and making sure all of your financial affairs are in order…it’s a lot to contemplate. Unfortunately, the environment you retire into can have a big impact on your retirement savings.
However, a solid financial plan can help you prepare. Here are our top ways to ensure you’re best prepared for whatever the future may bring.
Build Your Emergency Fund
We’ve said it before and we’ll say it again: Make sure you have enough saved to pay for unexpected events. Having some extra funds available for emergencies is an essential component of your overall financial well-being, with enough cash to cover six months of expenses being a common recommendation. Try the following steps to build up your fund, after all, the more you save, the less likely a crisis will affect you.
1. Set several smaller savings goals, rather than one large one. That will ensure you don’t stress your cash flow, making it too easy for you to rationalize abandoning your savings routine.
2. Create a system for making consistent contributions. There are a number of different ways to save, and as you’ll read below, setting up automatic recurring transfers is often one of the easiest.
3. Regularly monitor your progress. Find a way to regularly check your savings. Whether it’s an automatic notification of your account balance or writing down a running total of your contributions, finding a way to watch your progress can offer gratification and encouragement to keep going.
4. Park it somewhere safe. Money market funds and high-interest savings accounts are two good places to park your emergency fund. You need safe, liquid options so that your money is accessible in times of need.
5. While You’re at it, Build a Reserve Fund Too. To be better prepared, create options for your future self to deal with a shock. Building cash reserves above a normal emergency fund, eliminating debt to lower fixed monthly payments, or working part time can help create financial slack to help you be agile as your retirement life unfolds.
Protect Your Cash Flow
Having a monthly budget is essential to keeping track of your financial health. Do you know where your money goes every month? If not, understanding your personal cash flow will help you better manage — and measure — your funds, should the worst happen. Cash flow refers to your income minus expenses over a set period of time. This term is helpful for both individuals and businesses as it can clearly indicate what direction finances are heading.
Anyone can determine their cash flow by creating a budget. All you need to do is write down your monthly income, including sources of passive income, and then subtract all your expenses. Instead of focusing on a single month, you may want to track your expenses for three months.
In the Event of a Crisis
If – or sadly, when – a crisis hits, you need to know what to do, and fast. Start by making some immediate cutbacks and rebuild from there.
1. Cut back expenses: Small changes add up. Make your coffee at home, reduce energy consumption, cancel unnecessary expenses like luxury food deliveries and even changing your cell phone packages can all add up.
2. Make more drastic changes: To cut back further, consider selling your second home/rental property, downgrade your car, take on a second job, refinance your mortgage, let your child help pick up their college expenses.
Start with the smaller changes and resort to the major changes if needed down the line. To better prepare for an unexpected financial shock, you need a sense of other funds they might have access to such as home equity line of credit or 401(k) loans.
Maximize Your Liquid Savings
Finally, cash accounts, such as checking, savings, and money market accounts—as well as certificates of deposit (CDs) and short-term government investments—will help you the most in a crisis. You’ll want to turn to these resources first because their value doesn’t fluctuate with market conditions, unlike stocks, index funds, exchange-traded funds (ETFs), and other financial instruments in which you might have invested.
Having liquid assets like cash is smart for any portfolio, especially during an economic downturn. Not only does cash come in handy for taking care of life’s unexpected expenses, it can also free you to take advantage of opportunities.
Final Thoughts
Life is unpredictable. So one last way to protect yourself for the future is by keeping your financial house in order now. You might think you don’t have the time or money to deal with these things on a regular basis, but they can create much larger disruptions of your time and finances if you ignore them. A solid financial plan will include various projections to help you determine whether your assets will provide you with the income required to fund your retirement, and prepare for life’s major downturns.
Specializing in retirement income planning, Agemy Financial’s objective is to see that their clients can retire and stay retired. Our purpose is to educate retirees – whether that be planning for retirement, legacy planning, wealth management, or just holding your hand when it’s time to leap into retirement or out of a financial crisis.
Be prepared – and stay prepared – with our Fiduciary advisors at Agemy. Contact us here today to get started
6 Goals To Have For Your Finances Before Retirement
NewsMay 17, 2022
Retiring from work? Congratulations! But before you tick off your retirement bucket list, you need to tick off your retirement to-do list.
If there’s one thing this year has taught us, it’s that things can change quickly. Putting money away when you don’t have any immediate need for it can be a little difficult. With this in mind, we urge you to think a little into the future.
Setting financial goals is a big step towards becoming financially secure before and in retirement. Whether it’s setting short-term, midterm, or long-term financial goals, you’ll be working towards something specific for your individual needs and circumstances. Financial goals are savings, investment or spending targets you hope to achieve over a set period of time. The stage of life you’re in usually determines what type of goals you wish to achieve.
Here are 6 goals to have for your finances before you reach retirement.
1. Crunch Those Numbers
Before you retire, you should take the time to understand how much you’ll need in retirement and how your accounts will provide income. Budgeting may not be the most fun, but it can help you spend less than you earn. With a budget, you can successfully account for where your money is going and start thinking about where you can begin saving. Start by categorizing your spending.
For example, you could create budget categories for food, rent, savings, nights out on the town, Netflix, and so on. Next, look at your total monthly income and expenses. Using your after-tax income, allot a certain amount of money to different categories in your budget. There are many apps out on the market that automate your budgeting for you, but you should also consider consulting with a financial planner to help you plan how much you’ll need, how much you currently have saved, and how to fill in any gaps. You will also want to take the time to estimate your expenses in retirement to confirm you have the income to cover them.
2. Put Your Savings Strategy on Auto-Pilot
Bigger is better when it comes to your savings account. While saving can seem hard, automating your savings will make it significantly easier. By setting up automatic transfers to your savings account from your checking account, you can put your savings strategy on auto-pilot and you’ll hardly even notice the money is gone.
Start by automatically saving 10% of your income with each paycheck. You can typically set up automatic transfers online or by talking to your bank. Automating your savings can make the process easier and help you build wealth effortlessly.
3. Get Up to Speed on Insurance
Make this a top priority as you’re planning to retire so you don’t spend any time uninsured. Your options depend on your age, but the most common types include:
4. Self-Care Security
Want to know one of the best things to invest in? Yourself. It may bring returns on your happiness, success and even salary. Think about what new skills could beef up your resume, and look for learning opportunities in your community or online that could help you move your career forward.
Not only that, think about what you want to accomplish in the future. Think about the things you;ve always wanted to pursue but didn’t have the time to do. Perhaps it’s going back to school to get your MBA, or you’re looking to learn a new trade such as coding. You can easily look into resources and classes on LinkedIn or take up a Masterclass. By investing in yourself, you can become more well-rounded.
What’s most important is your health. So focusing on eating well and moving your body daily is essential to enjoying your golden years to their fullest.
5. Keep Growing Your Money
A secret weapon to jump-start your retirement is time. The magic of compounding interest can turn just a little bit of savings into a large nest egg. Strive for saving 10% to 15% for retirement through your employer-sponsored 401(k). If you’re eligible, make sure you contribute enough to get a company match, at least! It’s free money and a sweet job perk. Also, consider getting extra tax benefits by contributing to a Traditional or Roth IRA.
If you work for yourself, you might want to check out retirement plans for self-employed people. Options like a SEP-IRA can help you save for retirement on a tax-deferred basis, just like employees on company plans.
Just remember, after you’ve retired, your retirement income plan may include two sources:
Guaranteed income sources.
Assets to fund retirement.
6. Sit Down with Your Financial Advisor
Still not sure where to start on your financial strategy? Consider sitting down with a financial advisor. By taking a look at your entire financial situation, they can help you establish a customized plan designed to meet your short- and long-term goals. Then, your financial advisor can help you select suitable products and services designed to put your plan into action.
At Agemy Financial Strategies, our firm exists for the purpose of helping people achieve their personal and financial goals. Our philosophy is to deliver quality financial programs and teach principles for successful living. We work hard to deliver a dependable retirement income strategy, in any market, so that you can enjoy the “best” of your lives during retirement.
Final Thoughts
The best thing about setting goals and financial planning is you can review and update your goals and monitor your progress in reaching them. In the process, you will find that both the small things you do on a daily and monthly basis and the bigger things you do every year and over the decades will help you achieve your financial goals.
We want you to know we’re here to help you navigate retirement and any questions that come up during your retirement process. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.
For more information on our retirement and financial planning services, contact us here today.
Connecticut vs Colorado: Where to Retire?
NewsMay 16, 2022
We’ve covered the pros and cons of retiring in Connecticut and Colorado, but in today’s blog, we compare the two to help make that life-changing decision a little easier.
Many people choose to move somewhere different to spend their golden years in a beloved place that provides comfort and resources.
Whether you’re considering moving out of, into, or remaining in Connecticut or Colorado for your golden years, Agemy Financial Strategies can help. As a financial firm based in Connecticut, with offices in Colorado, we can offer you first hand experience and knowledgeable advice on how to manage your retirement in these beautiful states.
First, here’s a look back at some of the pros and cons to think about.
Pros & Cons Of Connecticut
Pro 1: The crime rate in Connecticut has been steadily falling
Did you know that Easton, Ridgefield, and Madison top the state’s safety rankings? Just another reason to spend your retirement here. There’s a sense of safety which is comforting to anyone. Connecticut is well known for its great small community atmosphere. Many residents boast their small town feels more like a family.
Some of the best cities to live in are in Connecticut because their record of safety continues to improve. The state is experiencing its lowest crime rate in decades, with the overall ratio being about 20 incidents per every 1,000 residents. The rate of violent crime is only 2 per 1,000, which makes most communities a safe place to raise a family and let your kids outside to play in the front yard. Compared to other places you could live along the East Coast, you’ll find Connecticut has a lot to offer.
Pro 2: Connecticut residents live longer
Debate all you want about quality of life in Connecticut, but duration of life in the state is indisputable. Connecticut has the fifth-highest life expectancy in the United States, according to data provided by the Centers for Disease Control and Prevention.
Connecticut residents can expect to live an average of 80.4 years, with females at 82.9 and males at 77.9. The findings, published earlier this year in the National Vital Statistics Reports, reviewed 2018 population estimates, state-level mortality and each state’s death and population figures that year for older Medicare beneficiaries.
Con 1: The cost of a house is high in Connecticut
The pandemic has sent CT house prices through the roof and drained the inventory.
Zillow reports that the median home value in Connecticut is about $348,047. With an extremely low supply of available homes for sale and skyrocketing demand, some would-be buyers feel as though it is becoming increasingly difficult to afford the cost of moving into a new home. The highest median home price and most drastic change over the last two years is in Fairfield County, where there was an increase of 43.5% to more than $400,000.
How long can this housing spike remain? That all depends on the supply. According to the Berkshire Hathaway HomeServices report, total 2022 home sales are not expected to reach 2021 numbers simply because Connecticut real estate agents are running out of inventory.
Con 2: The cost of living is high in Connecticut
There’s no point in beating around the bush here: Connecticut is an expensive state, and living costs are higher than the national average. The cost of living in Stamford (one of Connecticut’s most expensive cities) is only 17% lower than Manhattan, New York. Compared with all other states, Connecticut has the eighth highest overall cost of living.
In general, living in dense, urban metro areas is more expensive than living in more rural areas. Connecticut is home to four metropolitan areas. The most expensive in the state is the Bridgeport-Stamford-Norwalk metro area, where the cost of goods and services is 15.3% higher than the national average and 9.2% higher than the statewide average. If you can afford to live here, then there are plenty of advantages for you to enjoy. Fewer people are finding it possible to do. Plus the rural areas present a cheaper-cost of living if you want to spend your golden years out of the metro hustle and bustle.
Pros & Cons Of Colorado
Now that you have a sense of the pros and cons of living in Connecticut, we can jump into the pros and cons of living in Colorado.
Pro 1: Access to Quality Medical Care
Colorado rounds out the top ten for overall health care in America. The state has some of the highest-quality medical care available with access to top-level hospitals. Though some remote areas may lack the ease of access, most of the population is never far from premium medical care.
Additionally, health care costs less in Colorado than in many other states. Thanks to significant policy moves, Colorado made strides to improve affordability and serve as a model for other states.
Pro 2: Retirement Communities are an Abundance
Traditionally, people tend to retire in warmer states such as Florida. You might be surprised to see that trend change as more retirees venture to Colorado. The state saw a significant jump in the number of people retiring there since 2010.
Aside from having more people your age to connect with, Colorado has some impressive retirement communities to make it even easier. Get the best of everything with neighbors your age and loads of activities to keep you as social and busy as you want to be.
Con 1: Prepare for the Cost of Living
One of the biggest things that Colorado and Connecticut have in common is that the price of livin in both states is high. The Taxes are better in Colorado, but you may notice a bump in the cost of living. Depending on where you currently reside, you may need to pay a little more for some things.
While you may pay substantially more for housing, you should only see a slight uptick in groceries and transportation. On the other hand, most people should see a drop in health care costs and even spend less on utilities. It’s a good idea to do your research so that you don’t get sticker shock! Try using a comparison calculator for a ballpark idea.
Con 2: Being Mindful of Wildlife
There are a lot of pros to being surrounded by nature, but the biggest con would be being mindful of the wildlife that comes with it. Some people love to see moose, deer, and other beautiful animals roaming through their yards, but not all Colorado wildlife is welcome. Colorado has some dangerous creatures that can do damage if you’re not prepared.
Though animal attacks remain rare in Colorado, it’s still something to consider before retiring there. Education goes a long way, and you can easily prepare to handle the wildlife. Here’s a rundown of the most common animals that could pose a risk.
Comparing the Two
According to BestPlaces.net’s 2022 Cost of Living Calculator: Denver, Colorado vs Hartford, Connecticut
A salary of $100,000 in Denver, Colorado could decrease to $71,082 in Hartford, Connecticut (assumptions include Homeowner, no Child Care, and Taxes are not considered.)
Comparison Highlights
– Median Home Cost is the biggest factor in the cost of living difference.
– Median Home Cost is 74% cheaper in Hartford.
Final Thoughts
Now that you know some of the pros and cons of retirement in both states, it’s important to look at your retirement plan and see if this is something that would benefit you. Both states have a lot to offer. Once you have estimated the amount of money you may need for relocating in retirement, a sound approach involves taking a close look at your potential retirement-income sources.
At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions that come up during your retirement process, including relocation opportunities. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.
For more information on our retirement and financial planning services, contact us here today.
Pros and Cons of Retiring in Colorado
NewsMay 04, 2022
Not many places on Earth compare to the beauty of Colorful Colorado. The unassuming plains, enticing terrain and abundance of wildlife are just a few of the benefits that see so many flocking there to live out their retirement years. But is the hype well-deserved? Read on to find out more…
Many Americans choose to uproot somewhere new to spend their golden years in a beloved place that provides comfort and resources. Maybe you want mountains or beach backdrops for your morning coffee. Perhaps you crave access to golf courses, bike trails, or lakes for fishing. If you’re thinking of where to retire, have you considered retiring in Colorado?
It’s currently one of the best options in the United States for retirees. Even if you haven’t considered the Centennial State before, you may want to give it a look now. To help you decide if Colorado is the right place to spend your retirement, we compiled a list of the top pros and cons of retiring in Colorado.
When it comes to relocating to or from the state of Colorado, there are a number of benefits and a few drawbacks you should consider. Whether you’re considering moving out of, into, or remaining in Colorado for your golden years, Agemy Financial Strategies can help.
Our head office is in Connecticut, but did you know that we now have a base here in Colorado? Equipped with first-hand knowledge, we can offer you experienced advice on how to manage your retirement in this beautiful state. But before making such a life-changing decision, here’s a look at some of the pros and cons to think about.
Pros of Retiring in Colorado
Enjoying the Scenery
Colorado is home to some of the most beautiful countryside in America with its impressively massive mountains, towering trees, rolling plains, crystal clear lakes, and soft sand dunes. With trails for every fitness and experience level, you’re never too far from nature.
There’s something about waking up to have your morning coffee with the mountains out your window. Of course, you can always take your fill of sand at Great Sand Dunes National Park & Preserve. Are you craving a dip in the water? Visit one of the many sparkling lakes or rivers winding through the state!
Here are just some of the many places you can easily visit when retiring in Colorado:
Pay Lower Taxes in Retirement
Colorado routinely ranks among the top tax-friendly states for retirees. The state income tax range is a low, flat rate of 4.63%, and you get a fair deduction on retirement income. Sales tax may run higher in the state, but it doesn’t apply to groceries or medication. Another great reason to retire in Colorado, there’s no estate tax. You can leave money to your family without paying hefty fees, which is a huge perk.
Access to Quality Medical Care
Colorado rounds out the top ten for overall health care in America. The state has some of the highest-quality medical care available with access to top-level hospitals. Though some remote areas may lack the ease of access, most of the population is never far from premium medical care.
Additionally, health care costs less in Colorado than in many other states. Thanks to significant policy moves, Colorado made strides to improve affordability and serve as a model for other states.
Retirement Communities are an Abundance
Traditionally, people tend to retire in warmer states such as Florida. You might be surprised to see that trend change as more retirees venture to Colorado. The state saw a significant jump in the number of people retiring there since 2010.
Aside from having more people your age to connect with, Colorado has some impressive retirement communities to make it even easier. Get the best of everything with neighbors your age and loads of activities to keep you as social and busy as you want to be.
Cons of Retiring in Colorado
Prepare for the Cost of Living
Taxes are better in Colorado, but you may notice a bump in the cost of living. Depending on where you currently reside, you may need to pay a little more for some things.
While you may pay substantially more for housing, you should only see a slight uptick in groceries and transportation. On the other hand, most people should see a drop in health care costs and even spend less on utilities. It’s a good idea to do your research so that you don’t get sticker shock! Try using a comparison calculator for a ballpark idea.
Severe Weather
Coloradoans see an abundance of sunny days every year, but that doesn’t mean they’re exempt from severe weather. Depending on where you settle in the state, you could face high winds, hail, and even wildfires. Additionally, some parts of the state receive high levels of snow that make it challenging to get around.
Be prepared for the occasional damaging storm. In 2017, parts of Colorado saw enormous balls of hail that caused billions of dollars of damage. The large hail balls damaged homes and vehicles around Denver, but it wasn’t the first incident in the state.
Dangerous Wildlife
There are a lot of pros to being surrounded by nature, but the biggest con would be being mindful of the wildlife that comes with it. Some people love to see moose, deer, and other beautiful animals roaming through their yards, but not all Colorado wildlife is welcome. Colorado has some dangerous creatures that can do damage if you’re not prepared.
Though animal attacks remain rare in Colorado, it’s still something to consider before retiring there. Education goes a long way, and you can easily prepare to handle the wildlife.
Dreaded Traffic
The horror traffic stories are true. In some parts. Due to the popularity of Colorado, some residents have been irked by the overcrowding, and in very populated areas, traffic congestion is also a problem. These are somehow inevitable consequences of a popular place. As more and more people move to live there, the population increases and overcrowding continues. For retirees wishing to live in Colorado, the overcrowding can be a problem if you were hoping to move into a quiet and calm environment.
Final Thoughts
To summarize, Colorado has great weather, the pension taxes are lower than in most states, and lots of retirees live there with several retirement communities all over. On the flip side, Colorado’s living expenses are high, and some people have complained of overcrowding and traffic congestion in some areas.
Now that you know some of the pros and cons of retirement in Colorado, it’s important to look at your retirement plan and see if retiring here would benefit you. If you’re like most people, qualified-retirement plans, Social Security, personal savings and investments are expected to play a role. Once you have estimated the amount of money you may need for relocating in retirement, a sound approach involves taking a close look at your potential retirement-income sources.
At Agemy Financial Strategies, we want you to know we’re here to help you navigate retirement and any questions that come up during your retirement process, including relocation opportunities. As Fiduciary advisors, it’s our duty to act on your behalf in finding the right solutions for your individual wants and needs.
For more information on our retirement and financial planning services, contact us here today.