The Top Considerations to Have as You Approach Retirement
If you’re lucky enough to live up to your retirement age, then, there’s good reason to be thankful. However, more than anything, you need to be prepared. Moreso about the financial implications that come with the change in life phase.
The definition of retirement usually varies from one person to the next. It can be a full-blown retirement, a semi-retirement deal where tasks gradually diminish or an adventure of sorts. However you choose to define that next stage in life, it’s good to be ready for the transition. Without proper planning, you may find yourself surprised by the turn of events.
The transition period may take longer depending on the degree of your remuneration package. In any given populace, there’s always going to be those who’ve been saving for eons and just can’t wait to retire. At the same time, a fair fraction of the people haven’t thought through what they’ll do once they call it quits.
Irrespective of where your lie in the spectrum, experts in the field believe that the best thing to do once retirement comes knocking is to take time in evaluating just how secured all financial bases are.
Here’s a couple of things you need to consider as you prepare to bid farewell to your workplace.
Unbeknownst to many, health care costs actually increase as one advances in age. Data presented by Fidelity Investments argues that on average, a 65-year-old couple spends about $280,000 in health expenses all through their lives.
After the age of 65, senior people qualify for Medicare. This means that if you decide to retire by 65, the government will swoop right in and chip in on your medical expenses. While it’s true that Medicare covers a wide array of treatments, it doesn’t cover all ailments. Some things like routine vision and dental are not part of the package.
According to Linda Rogers, who happens to be a certified financial guru and founder of Planning Within Reach, many people retire before they are 65 and fail to consider the monetary repercussions of their actions, especially when it comes to health. However, she urges that individuals who are aged 65 to not shy away from retiring since the Medicare provision was created for such circumstances.
Other options like the Affordable Care Act (famously known as Obamacare), could come in handy if you’re looking for subsidies based on your income. Alternatively, if you have no pre-existing ailments and are in good health, you can opt for short-term plans which offer small coverage.
While the law allows you to start banking your Social Security monthly checks soon as you hit 62, you stand to get a better payday if you can delay the payments by 8 more years. From age 70 onwards, you’ll be receiving benefits which are 6-8% higher than if you’d begun earlier.
On paper, this sounds dandy. In reality, a lot of people don’t delay their social security payments. Data provided by the Bureau of Labor Statistics shows that about 54.7% of people aged 60-64, work part-time to earn extra. The data went ahead to show that 31.2% of individuals in the 65-69 years old bracket were still involved in the workforce.
As per the law, there are limitations on how much you can earn while working without your benefits being touched. This scenario applies if you start earning social security monies before your specified retirement age(usually 66 or 67). At present, the law stipulates that the cap is $17,640. If you earn anything higher than that, you’ll face reductions. More specifically, a $1 will be taken from every $2 earned.
Importantly, the money gets refunded back once you attain retirement age. The figures get added back on your monthly checks to ensure that you benefit from your savings.
Terrence Herr, the managing partner at Herr Capital Management, recently opined that as an employee there’s no need to risk money you’ll need monies they need to make use of over the next couple of years. Instead, the funds need to be invested in steady investments.
Once that is done, Herr further added that it becomes less of a challenge for you to make risky investments. Especially when you have 3 years worth of income safely stashed away. In conclusion, Herr quipped that having a cushion at the ready in case of turbulence can be a great relief.
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