As we go throughout our careers, the goal is to always have a steady paycheck, to have our income streams increase, and work towards a successful retirement. But what happens when we reach retirement and that steady income stream is no longer there? This is where income allocation becomes necessary. Doing this properly can lead to that final goal of a successful and long-term retirement.
It is hard to do just about anything in our world without earning a paycheck. But it is what you do after you get that paycheck that makes a difference.
Whether you want to or not, we all must pay our taxes. Regardless of if you are a small business owner, freelancer, or manager at a corporate office in Raleigh, taxes are a part of life. And if you are a homeowner, you have property and school taxes to pay as well.
After you pay your taxes, you have your everyday bills. You may wonder why taxes come first but remember, not prioritizing your taxes can cause a very high penalty that will limit you when it comes to Steps 4 and 5. Everyday bills can be as simple as your mortgage or rent payment to your gym bill or your Netflix account payment. You also must remember to add in your grocery bills.
One of the many benefits of working so hard throughout your life, is to be able to afford the things you want to. This could mean a vacation out in the Outer Banks, running a race in Charlotte, a birthday party, the list can go on and on.
Whatever is leftover at the end of the day is what you should be putting towards your retirement. This could be in the form of a 401k, a savings account, an HSA, real estate, or the stock market.
But what happens after you retire? When Step 1 goes away? The reality is, Step 5 must be able to fund Steps 2-4 in retirement. This is where income allocation is key and can help set you up for a fruitful retirement. The key is using your investments to recreate what was once your paycheck. But we know it is not as simple as that which is why you will need guidence from a local financial advisor to help you do the math.
If you are preparing for retirement and need help developing an income allocation plan, let us find you the right advisor for your situation. Simply, click "Find Match" go throught the questions and get matched instanly with a financial advisor in North Carolina.
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