Planning for retirement is a very involved process. You have to plan based on a forecast of things that are out of your control, including the economy, your health, and your life span. But there are a few things you can consider today to help ensure that you are best prepared for your life during retirement.
Five Questions to Ask Yourself When Planning for Retirement
When so you want to retire? Of course, many people would answer yesterday. But it’s not just about when you want to retire but also when you are able to retire. While many people choose to go back to work after retirement and must go back to work out of necessity.
Set a target age that feels right for you but will also set you up for success. In terms of defining when you will be able to retire (and maintain the kind of lifestyle you want in retirement), the four factors below are critical. For example, when you want to retire is connected to how much you’ll have to save-ir you want to retire earlier, you’ll need to save more now.
How much money will you need to live on comfortably? How much to do the things you want? The next factor to consider is how much money you will need to live comfortably (this becomes your minimum required) and how much money you will want for any fun retirement activities.
You’ll want to consider how much money you will be comfortable living on for the years or decades between when you retire and when you die.
How much fixed income will you be receiving? This is income that is guaranteed when you retire or at a certain age, including pensions, fixed-income annuities, and Social Security. For many Americans fixed-income sources (in particular Social Security) are linchpins in their retirement plans.
Once you know how much fixed income you will be receiving, you can determine how much extra you will need to supplement your income during retirement.
How much will you need for medical expenses? Currently, at age 65 Americans are eligible for Medicare, which covers many medical expenses-including doctors’ visits, lab work, and emergency services. But Medicare doesn’t cover all prescriptions or long-term care.
Both prescriptions and long-term care can be very expensive, so it’s important to prepare for them. You also need to consider health insurance if you plan to retire before 65-if you’re not prepared, unexpected medical expenses have the potential to totally derail your retirement lifestyle.
Do you want anything left over? Some people choose to leave money behind for family or charities and others don’t. It’s important to decide what you want to do and set goals before you retire. If it is important to you to leave money to beneficiaries, the money should be allocated in an investment fund separate from your retirement money.
A retirement plan is like a big web: everything is connected in some way. It is important to have an understanding of how all these aspects affect each other and your goals for retirement. If one aspect is askew, it can upset the rest of your plan and affect your overall goal of a long and enjoyable retirement. Please call if you’d like to discuss this in more detail.