Saving for retirement is important no matter what stage of life you’re in. However, the way you handle your finances in the years approaching retirement can have a huge impact on when you retire and your quality of life after retirement. The transition to a life without a paycheck is exciting, but it requires a lot of planning. That said, you’ll want to consider the following five tips to make sure you’re setting yourself up for the best possible retirement.
If you need assistance with your finances, work with a professional financial advisor from Good Life Financial Advisors of Mt. Pleasant. We’re ready to help create a personalized plan for your specific needs!
Estimate How Much You’ll Need
Before retiring, you’ll want to have enough saved to live off of for the rest of your life. But figuring out how much you’ll need to make this happen may prove difficult.
Perhaps you estimated how much you would need decades ago and have never taken the time to revisit your estimate, or you picked a fairly arbitrary number that sounded like a lot. You also may have saved without a specific end goal in mind. No matter what your situation, as you approach retirement, you should take time to create or update the estimate of how much you’ll need.
There’s obviously no way to come up with a perfect number, but if you start with your current spending, plan for a longer than average lifespan, and factor in potential additional costs such as healthcare, you’ll likely be on the right track. For personalized assistance, be sure to use our retirement planning services at Good Life Financial Advisors of Mount Pleasant to create a concrete goal.
Plan for Healthcare Expenses
Healthcare is often one of the biggest expenses for retirees. Creating a plan for how you’ll cover various healthcare issues can save you from additional stress and expense during retirement.
Prior to retiring, you should take the time to learn about Medicare. Since there’s a lot that Medicare doesn’t cover, you will likely want to look into purchasing supplemental policies, known as Medigap insurance. Medigap policies were created specifically to cover the “gap” between the basic medical services that most retirees require, and what Medicare covers.
Another area to look into prior to retirement is long-term care insurance. Many insurance plans, including Medicare and most Medigap policies, don’t cover many aspects of long-term care, which can easily cost tens of thousands of dollars. Thankfully, the years when you’re approaching retirement is the best time to purchase long-term care insurance.
Choose Your Social Security Claiming Strategy
There are many different strategies for claiming Social Security. Choosing the right option for you is important, since you don’t want to leave money on the table. But with so many factors to consider, it can be difficult to know which claiming strategy is best for you.
Adding to the complexity of Social Security claiming is the unreliability of the advice that comes directly from the Social Security Administration (SSA). Both SSA representatives and some information on its website can be incorrect for certain individuals. If you do consult with an SSA representative, you may also want to review your claiming strategy with a financial advisor to make sure you’re using the best possible strategy for you.
Eliminate Debt
When you retire, ideally you will have paid off all of your debt. This includes credit card debt, car loans, any mortgages, etc. When you’re retired, you’re living on a fixed income. Debt can quickly eat into this income and leave you with less for day-to-day living, let alone additional expenses such as traveling. As you approach retirement, evaluate how much debt you have, if any, and create a plan that allows you to continue saving for retirement while also paying off debt.
Consider Partial Retirement
Retirement is often perceived as all or nothing. You have a final day at work, they throw you a party, and then you never work another day in your life. For some people, this may be the case. But there are also plenty of alternative options. You may choose to take on some consulting work, continue working part-time in the same or a similar role, or you may work part-time in a less demanding position. All of these options can provide additional income, which can be a great option for those that would like to retire but don’t have quite as much saved as they would like. It can also help those who are looking for more of a transition into retirement and enjoy the social aspect or rewarding nature of their job.
We’re Here to Assist You
We hope you consider these five financial tips as you approach retirement. Retirement has the potential to be some of the best years of your life, but the decisions you make in the years leading up to it can really affect the quality of your retirement. For further information and personalized advice regarding saving for retirement, consider working with a professional from Good Life Financial Advisors of Mount Pleasant!
