A Guide to Retirement Planning in Austin, Texas

Austin is a booming city with lots of business professionals just starting their careers and those ready to retire. The closer a person gets to the end of their career, the more they'll likely think about their retirement and how they intend to spend their golden years. So is retirement planning in Austin, Texas, necessary, and if so, when and where should you begin?

Retirement income planning in Austin is a multi-faceted process with many steps and considerations that can change as you age. Yet, proactively planning for your future will increase the odds of obtaining long-term financial stability and security when you're no longer working. Take control of your future by learning the basics of retirement planning below. 

When Is the Right Time To Retire?

Many adults use Social Security benefits as part of their retirement income plans. The later you wait to withdraw your benefits, the more you can get. Here's a general breakdown of important Social Security ages:

• Age 62: The earliest you can draw Social Security Benefits is 62. However, starting at this age means you'll lose part of your earnings as a penalty.
• Age 67: This is the current full retirement age for individuals born in 1960 or later. You can get full Social Security benefits at this age.
• Age 70: By delaying your retirement until you're 70, you can get more income through Social Security Benefits.

Unfortunately, Social Security benefits are seldom sufficient as an Austin retirement strategy without additional savings and investments. The age at which you retire may differ from the standard guidelines depending on whether you must work longer to earn sufficient income or if you choose to stop working.
 

How Much Should Your Austin Retirement Savings Plan Have?

There's no specific amount you should have in your retirement income plan. Instead, consider the amount you think you'll need to be comfortable for the rest of your life. 

Many assume that having $1 million or 12 years' worth of their annual income is enough for retirement. Others prefer using the 4% rule, which states that retirees shouldn't spend more than 4% of their retirement savings annually to stretch their funds. 

Several factors can impact how much you should save for retirement, which we'll discuss below. 

Factors To Consider for Retirement Income Planning in Austin

Your Retirement Planning Timeline

Consider your current age and the age you expect to retire. Those years are crucial for retirement planning in Austin, Texas.

Ideally, you should begin saving and investing to secure your future while you're young. The longer you wait to save for retirement, the more difficult it can be to accrue what you need.

As you get older, your retirement investment portfolio should have income allocations for less volatile securities like bonds. Bonds have fewer risks than stocks but can still provide a livable income.

The good news is that you can begin saving for your retirement years at any time, despite the benefits of starting earlier. The right retirement investment advice in Austin from experienced professionals can help you invest strategically so you won't have to play catch-up for too long. 

Anticipated Retirement Spending Needs

Once you have an idea of when you want to retire and how long you intend to work, save, and invest, you'll need to know how you plan to spend your senior years. Would you like to spend time traveling the world or settle in a popular city close to family? Maybe you'd prefer to live a nomad lifestyle by traveling the country in an RV, or perhaps you'd like to spend your years in a rural town outside of Austin.

How you plan to spend your retirement will dictate how much money you'll likely need each year to live comfortably. For example, the cost of living in a bustling city is often higher than the cost of living on a farm in a rural area. 

A common misconception about retirement planning is that retirees only spend about 70% of their pre-retirement income. Yet, with inflation, longer lifespans, and the increase of independent seniors who like expensive activities, it's reasonable to assume annual expenses will be closer to 100% of pre-retirement income.

Knowing your needs, expenses, and lifestyle will help you understand how much funds you can withdraw annually. 

Ideal Financial Retirement Solutions in Austin

You have several options besides Social Security when planning for retirement. Common financial solutions include but are not limited to:

• 401(k), an employer-based retirement plan that deducts a percentage of a worker's pay that the employer matches
• Roth IRA, an individual retirement account for post-tax dollars and tax-free growth and withdrawals
• Self-Directed IRA, which is similar to a Roth or traditional IRA, but you own the account and can use it to invest in real estate, mutual funds, bonds, and stocks

You can choose the type of retirement plan that best suits your financial situation. 

Retirement Investments

Along with savings, your retirement plan should include other investments in mutual funds, stocks, or bonds. Most people start investing young when they can handle market fluctuations better and let their investments grow into a decent nest egg. You should assess your investments periodically to ensure they accommodate any lifestyle or financial changes. 

Bottom Line

Planning for your financial future takes more than a simple savings account. It's a multi-step process with many factors, considerations, and risks. Still, retirement planning is crucial for financial security as an aging adult.

If you're ready to begin retirement planning in Austin, Texas, contact Senior Resource Center. We have over 20 years of experience providing resources and retirement advice to Austin residents according to their financial goals and needs; call (512) 835-0963 for a complimentary consultation with one of our courteous and knowledgeable staff members.