Get tips for banking the most bucks possible to serve your work-free years.
You know you should plan for retirement, but does it sound like a daunting task? Retirement may seem like a long way off, but planning early is key to ensuring a safe and secure future. To start, working with a trusted professional — to help identify areas of importance or to explain things you may not know and may need to consider — will be a true asset.
Social SecurIty Basics
Want to know what kind of benefits you’re likely entitled to? Do some research by accessing the Social Security Administration (SSA) website. This will provide an estimate of what you will collect if you start receiving benefits at the age of 62, at full retirement age (between the ages of 66 and 67), and at the age of 70. With this knowledge in hand, you can plan how to maximize your benefits. Social Security is a significant source of income for retirees and knowing when to collect is a major concern. T. Wayne Fanning of New York Life Insurance says, “There is no singular answer. Personal assessment of your retirement needs will help dictate when you should apply for your benefits.” A few things to be aware of that could decrease benefits are continuing to work while collecting, possible deduction of Medicare premiums, and payment of federal and state taxes. Collecting government pensions may cause a decrease as well.
Some steps to consider in knowing when to collect:
Evaluate retirement expenses and sources of income such as a 401(k), a pension plan, or an IRA. Estimate how much you have saved and what you plan to spend after retiring while factoring in life expectancy, health, and your employment status.
If collecting before full retirement age, benefits will be reduced permanently. The benefits will continue to be higher the longer you wait after full retirement age.
Another step is being able to adapt to changes, including unforeseen personal circumstances. “You need to assess the potential pitfalls that could happen along the way. Needing to care for elderly parents, disability, or loss of income are things that can be addressed, and proper planning will help protect you from these financial uncertainties,” says Fanning.
Paying Off Debt
An important aspect to consider when planning for retirement is paying off debts. This could include potential mortgage payments. The Vanguard Group suggests that when interest rates are low you consider putting extra mortgage payments into a retirement account that holds stocks or bond investments. This can potentially allow money to grow, benefiting you in the long run.
Other forms of debt can include college loans. With college loans, the best option is to take out a loan that is scheduled to be paid off before retirement. Owing on a college loan into retirement eats away at money that can be spent on your daily cost of living. This also includes personal loans like auto or credit card loans – as they can include higher interest rates and can take a chunk out of savings.
Health Care
Major points to consider for medical care include your health status, location, age of retirement, the health plans you choose, and your income. Planning with an advisor, you will receive an estimate of different plans that can work for you. With guidance, you can also plan for any potential long-term care in the future that may be necessary. Health care for retirees generally remains stable most years, making it easy to plan for.
With some early and careful planning, and guidance from a trusted professional, you can safely enjoy your golden years.
