The conventional wisdom about planning for the retirement is to delay retirement as late as possible, save and invest smartly. Even though it is important, you should also consider other factors that will affect your retirement. Below you will find the most important tips to meet all your goals.
1. Calculate your retirement expenses
Don’t think that everything will work out somehow. You need to know how much you will need to live comfortably after retirement. Many website calculators say you need 80% of your income, some say even 100%. However, everything depends on your needs and hobbies. For many people, 80% is an overestimation of what they will need. Many seniors live comfortably with 50% of their pre-retirement income.
2. Plan your healthcare costs in advance
When you plan for the retirement, you should always take healthcare costs into consideration. Use your current budget to project your future expenses and also include a chance of higher health-care costs and long-term care.
Many people believe that Medicare covers everything. However, Medicare covers a half of healthcare expenses. It does not pay for prescription drugs you take regularly, for deductibles and co-pays. Medicare doesn’t cover illnesses that make you dependent on others. If that is the case, you will need long-term care insurance.
3. Think when you want to take Social Security
People can sign up for Social Security benefits at age 62. However, your payout will be lower if you begin payments at 62. For example, a baby boomer who signs up early will 25% less that he or she would if he waited until 66. Put simply, the best age for you to claim the social security benefits depends on your marital status, how long you estimate you will live, and whether you have a longevity risk.
4. Think about your mortgage
Of course, many people prefer not to carry debts into their retirement, but what about your mortgage payments? The simple advice is to pay off your mortgage as early as you can. However, if your rate is less than 5% you may be able to pay for it in retirement – if you plan for it.
5. Plan Smartly
Do you know about all accounts you own and how they work together? You should always think about the money you have been saving, especially if you only have several years left before the retirement. You may check your account and look at your statements, but it is not enough. You should be able to estimate all your savings if you want to know how much you really own. Many people set an asset mix once and forget about it. However, the mix that you set ten years ago may not be appropriate for you anymore.
Here’s What To Do Next…
Do you find retirement planning difficult or overwhelming? If you would like to put a plan in place and need professional advice, contact Calvert Investment Counsel now at 410-435-3270 or click here to schedule a call online. Together, we will find the best choices for your retirement.