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3 Financial Moves to Consider With Retirement on the Horizon
June 14, 2016
Planning ahead can help increase your confidence when it's time to transition into retirement
Retirement can be a very rewarding and exciting time of life. But after decades of working full-time, it can also be a big adjustment financially.
Here are three financial moves to consider as you prepare to retire.
1. 401(k) catch-up contributions.
Just 12% of 401(k) participants hit the maximum annual contribution limit.1 If you find yourself as one of the 88% of Americans who don't, now is a good time to make some changes to maximize your retirement savings.
The 401(k) catch-up contribution option enables savers age 50 and older to contribute more money to their 401(k) plan. In addition to the $18,000 annual limit to a 401(k) plan, workers age 50 and older can add $6,000 per year in catch-up contributions. Your contributions are made before tax, but withdrawals are taxed as ordinary income in retirement. These amounts are valid for 2015 and 2016 and may be adjusted in the future.
2. Rebalance your portfolio.
A great time to do this is when you meet with your Thrivent Financial representative to review your overall insurance and investment strategies. You'll feel better about the future knowing you have everything in place for this next stage of life.
While it won't guarantee you'll make a profit, it's a good idea to rebalance annually or when you make a life transition such as moving into retirement. Rebalancing allows you to make adjustments to your portfolio for risk tolerance or to make sure it is properly diversified.
Rebalancing is an unemotional way to restore your portfolio's mix of investments to its original target allocations. Doing so helps keep it in sync with your financial goals and risk tolerance – two factors that tend to remain constant.
There are many things to think through when preparing for retirement, and rebalancing your retirement portfolio should be one of them.
3. Build cash value in a life insurance policy.
While the primary purpose of life insurance is to ensure your family is cared for financially if you die, there are additional benefits to consider.
Some life insurance policies have a component known as cash value. This means the life insurance contracts have the potential to build cash value.
Some of these contracts allow you to withdraw the cash value. This cash value can be used to pay for higher education or other expenses.
Withdrawal of cash value will reduce the size of the death benefit, and reduce the amount of cash value available in the future. However, withdrawals from the accumulated cash value of your policy are income-tax free up to the amount of the premiums you have paid.
Talk to your Thrivent Financial representative about which products have the potential to build cash value should you need it in the future.2
We're here to helpIf you find that retirement is drawing closer, we're here to help you prepare and guide you through this transition. Thrivent Financial offers a diverse portfolio of insurance, annuities and investments, and personalized guidance from our financial representatives. We can help you live generously and feel more confident about your finances.
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This is a solicitation for insurance.
A Thrivent Financial representative may contact you. This contract has exclusions, limitations, reductions of benefits and terms under which the contract may be continued in force or discontinued. For costs and complete details of coverage, contact your Thrivent Financial representative.
THRIVENT FINANCIAL IS THE MARKETING NAME FOR THRIVENT FINANCIAL FOR LUTHERANS.
1 According to a 2013 Vanguard report.
2 Loans and surrenders will decrease the death proceeds and the value available to pay insurance costs which may cause the contract to terminate without value. Surrenders may generate an income tax liability and charges may apply. A significant taxable event can occur if a contract terminates with outstanding debt. Contact your tax advisor for further details. Loaned values may accumulate at a lower rate than unloaned values.