Retirement is an exciting milestone, but it can also be intimidating. You’re not alone if you’re unsure whether you’ve saved enough or how to make your money last. As your trusted retirement specialists in Central Pennsylvania, 1st Choice Financial Services, Inc., headquartered in Camp Hill, our independent advisor firm, provides full-service retirement planning and PA wealth management services to clients in Harrisburg, Hershey, Halifax, Lancaster, Lebanon, Enola, Mechanicsburg, and surrounding communities. 

Financial literacy simply means knowing how to understand and manage your finances successfully. In this article, we’ll explore seven reasons why it’s important to improve your financial literacy to live a comfortable and secure retirement in Pennsylvania.

1. Understanding Investment Alternatives

Retirement presents a wide variety of investment choices—stocks, bonds, mutual funds, and others—that can be difficult to decipher if you’re not financially knowledgeable. Understanding the basics of different investments enables you to choose a mix that fits your comfort level and goals. With some insight, you can make more confident choices with your 401(k) or IRA instead of just guessing. As an independent advisor, 1st Choice Financial Services, Inc. will guide you through these choices and explain them in plain language.

2. Mastering Tax Planning

Taxes don’t retire when you do, so tax planning is vital to making your money last. Withdrawals from traditional retirement accounts are taxable as federal income, and it can take a huge bite out of your income. Pennsylvania doesn’t tax Social Security or retirement plan withdrawals, but you’ll still need to account for federal taxes. It’s worth taking some time to learn a few techniques to reduce your tax bite—for example, stretching out withdrawals so you don’t bump yourself into a higher tax bracket. Wherever possible, take any senior tax breaks (like catch-up contributions) to reduce your burden further.

3. Social Security and Medicare Optimization

Social Security offers options: Take it early for a lower monthly payment or wait for a higher one. Being aware of this trade-off enables you to determine what’s best for you. If you’re married, being aware of the benefit regulations for spouses and survivors ensures that you won’t leave money behind. 

Medicare is composed of multiple parts and plan types. Being informed about when to enroll and how to pick the proper coverage will save you money and prevent penalties. 1st Choice Financial Services can guide you through these decisions and spare you from costly mistakes.

4. Budgeting and Expense Management

Retirement budgeting involves matching your expenses to your fixed income (from Social Security, pensions, and savings) so that you live within your means. Some expenses will go down when you retire (no commuting or work clothes), but others—especially healthcare—will increase. And don’t forget to include inflation—prices will rise over time, so your expenses could rise a bit each year. With a realistic budget and an openness to making changes, you can make your nest egg last and enjoy retirement without worrying about money.

5. Estate Planning and Legacy

Estate planning is what funnels your assets to your loved ones (and any charities you’re committed to) when you’re gone. Every retiree should have a will and beneficiary designations updated on their accounts. If your plan allows, you can also set up a trust to reduce taxes or control how your heirs inherit money. Understanding estate planning basics spares you from mistakes like not naming a beneficiary or failing to account for potential estate taxes. Being informed gives you peace of mind that your legacy will be handled the way you prefer.

6. Avoiding Financial Scams and Fraud

Unfortunately, older adults are a hot target for financial scams, so being on guard is essential. Being financially literate enables you to spot these danger signs. If something sounds too good to be true, it probably is. Never give out personal or financial details to cold callers or emails, and do not let anyone push you into a quick decision. For an extra layer of protection, run any suspicious offers past a trusted financial planner like 1^st Choice Financial—we can help sort out what is real and what is not and provide an extra layer of protection.

7. Proactive Planning and Flexibility

Retirement planning is not a one-and-done event. Financial literacy includes recognizing the need to revisit and update your plan as life changes. Markets fluctuate, inflation happens, and new laws affect your retirement savings. By staying proactive and checking on your plan regularly, you can make timely adjustments—whether that means rebalancing your investments or updating your budget. It allows you to stay on track toward your goals despite changing conditions.

Financial Literacy Is the Key to a Safe Retirement

You don’t have to do this alone. 1st Choice Financial Services, Inc., your Central Pennsylvania retirement specialists, has the experience and commitment to guide you. Contact us today to schedule a consultation and start preparing for the retirement you deserve.

Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.

This is not endorsed or affiliated with any federal Medicare program, nor any U.S. government agency.  If applicable, we do not offer every plan available in your area and contacting us at the phone numbers provided herein will direct you to a licensed insurance agent.  Any information we provide is limited to those plans we do offer in your area.  Please contact Medicare.Gov or 1-800-MEDICARE to get information on all of your options.  All rights reserved.

The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, 1st Choice Financial Services, Inc., and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.

The following link/content may include information and statistical data obtained from and/or prepared by third party sources that Foundations Investment Advisors, LLC (“Foundations”), deems reliable but in no way does Foundations guarantee its accuracy or completeness. Foundations had no involvement in the creation of the content and did not make any revisions to such content. All such third-party information and statistical data contained herein is subject to change without notice and may not reflect the view or opinions of Foundations. Nothing herein constitutes investment, legal or tax advice or any recommendation that any security, portfolio of securities, or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations, execution of required documentation, and receipt of required disclosures. All investments involve risk and past performance is no guarantee of future results.

A Roth conversion may not be suitable for your situation. The primary goal in converting retirement assets into a Roth IRA is to reduce the future tax liability on the distributions you take in retirement, or on the distributions of your beneficiaries. The information provided is to help you determine whether or not a Roth IRA conversion may be appropriate for your particular circumstances. Please review your retirement savings, tax, and legacy planning strategies with your legal/tax advisor to be sure a Roth IRA conversion fits into your planning strategies. 

This is not endorsed or affiliated with the Social Security Administration or any U.S. government agency.