Learn about retirement considerations and make a plan to ensure you’re on track.
When you have a retirement strategy that aligns with your goals, considers your timeline, and creates actionable steps, you’re better able to turn your retirement vision into reality.
As you near retirement, keep the following considerations and to-do’s in mind.
Envision the Future
During the working years, couples should take time to discuss what their hopes and dreams for retirement are. What type of life do you envision for yourselves? Will each of you travel, take up new hobbies, start a business? Setting goals is an essential part of retirement planning.
How long you expect to live is another key variable in the retirement planning equation. This, of course, affects how long your nest egg needs to last. This calculator from the Social Security Administration can help you get a baseline estimate; it’s important to consider how your family history, lifestyle, and current health may impact your life expectancy though.
Calculate Retirement Readiness
Easy-to-use calculators can give us a glimpse of how much we need to save and how long funds may last. In addition to estimating your life expectancy, you’ll need to set an income replacement ratio.
This ratio considers how much money you need to maintain your current lifestyle in retirement. Experts suggest replacing at least 70% of your pre-retirement income, but this will depend on the individual and the lifestyle they plan to lead.
Close the Gap
If you find projected expenses exceed projected income, develop a plan to increase retirement contributions. Perhaps you can redirect 1-2% of a pay raise, a portion of bonuses, or unexpected windfalls to a retirement account. Additionally, you can rework your budget to make room for extra contributions. If possible, make your contributions automatic.
Postponing retirement and benefits can give you additional time to earn and grow your money. For example, you can collect Social Security before full retirement age, but your benefit will be reduced. Conversely, delaying benefits until age 70 increases the benefit amount. Ultimately, your current health, work environment, and savings will likely all factor in to your decision.
What happens to your employer-sponsored benefits when you retire? If life and health insurance benefits are suspended, what might new premiums look like? Consider whether it’s in your best interest to explore private options while in good health to proactively ensure you have coverage in the future.
Do you need help with developing a retirement strategy? Click here to learn more about A+ Wealth Management and see how a financial advisor can help.