Avoiding Retirement Woes
How to Avoid Retirement Woes
According to the American Institute of CPAs (AICPA), the top concern of retirees is running out of money. While it’s a known fact that many of us don’t begin to save for retirement when we should, it appears that nearly half of all current retirees are concerned about outliving their retirement funds. However, there are some things you can do now to help mitigate the very real risk of outliving your retirement funds. These include the following:
- Consider purchasing a long-term care policy. While there is quite a heated debate on whether you should or shouldn’t invest in a long-term care policy, consider the following: regular health insurance won’t cover long-term care and neither does Medicare, which means that if you end up needing long-term care, it will have to come out of your own pocket. Can you afford to cover those expenses by self-insuring, or should you leverage the benefits of a long-term care policy? Knowing the answer to this question for your situation will give you peace of mind.
- Pay off any debt you may have prior to retirement. Reducing your monthly obligations can provide increased cash flow. It may be worth it to work an extra year and pay off items such as car loans and credit cards prior to retiring.
- Begin to ramp up your savings amounts when you hit age 50. Once you reach age 50, the catch-up contribution allowed to your workplace retirement account is an additional $7,500 yearly, while those with an Individual Retirement Account (IRA) is an additional $1,000. These are the catch-up limits for 2023 and will increase each year so check the limits for the year you're reading this to ensure you don't miss out on any opportunities for saving. If financially able, be sure to take advantage of these catch-up contribution.
- Think about relocating. While no one likes to move, it may be beneficial to downsize your current living situation. A larger home means a larger mortgage payment, and even if your home is paid off, you’ll still be facing higher maintenance costs as well as higher property taxes. Consider moving to a smaller home, or if you live in a high cost of living area, consider relocating to a more retirement friendly community.
- Put off your retirement. While there are some that can’t wait until the day they can retire, others face retirement with dread. If you’re healthy and in a position to continue working, it may be beneficial to do so. Working just a couple extra years can increase your Social Security benefits, while also providing you with the ability to put away a bit more money. Many retirees also start their own business, or work part time in an industry that has always interested them. There are a lot of options available that can prove to be helpful in increasing your retirement stash.
- Consider working with a financial planner. If all of this is simply too overwhelming, consider a consultation with a financial planner. Financial planners can answer any lingering questions you may have, help you create a sound financial plan that works with your needs, or simply advise you how much money you should to put away now to pursue your financial goals for retirement. They can also provide insight on things you don't know that you don't know. Even if you only meet a few times, it should be worth the cost to have access to their expertise.
Retirement doesn’t have to be scary. Starting to plan now may help provide you with the assurance that you’ll be able to enjoy your retirement.
*This content is developed from sources believed to be providing accurate information. The information provided is not written or intended as tax or legal advice and may not be relied on for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. Neither the information presented nor any opinion expressed constitutes a representation by us of a specific investment or the purchase or sale of any securities.This material was developed and produced by Advisor Websites to provide information on a topic that may be of interest. Copyright 2023 Advisor Websites.