The average American spends 20 years in retirement but only half of Americans have calculated how much they really need to save for retirement, according to the U.S. Department of Labor Employee Benefits Security Administration. If one of your life goals is to be financially secure in retirement, there’s no better time than the present to put together a financial plan and start working towards your goals.
Still, preparing for retirement by working with a financial advisor and contributing to savings and investment accounts during your working years, may not be enough for you to enjoy a stress-free financial life during retirement. You will need a money management plan to ensure you don’t end up falling into a cycle of overspending or wipe out your hard-earned savings accounts by making some uninformed financial decisions.
Here are some valuable tips and strategies to help you be financially secure throughout your retirement years:
Prepare with the Right Plan
In an article by USA Today, David Laster, director of investment analytics at Merrill Lynch Wealth Management and author of Pitfalls in Retirement points out, “Failure to plan is one of the most common reasons why retirees run into problems.” Working without a budget and neglecting to figure out what really brings fulfillment can lead to overspending problems and difficulties with managing money. Addressing these issues before heading into retirement is one of the best decisions you can make for yourself.
It’s also important to consider the effect of taxes when withdrawing from your retirement accounts. Pat Grenier of CFP BRP/Grenier Financial Services tells Forbes that retirees should, “take out your least-expensive assets first — assets that are not earning as much growth or interest, or assets that are non-taxable.” Working with a financial advisor and tax planner can help with this process.
Accommodate for Rising Health Care Costs
The Centers for Disease Control and Prevention (CDC) reports the cost of insurance premiums and employee medical claims is “at an all-time high and continues to rise”. Even though you may have adequate health insurance coverage for most of your doctor or hospital visits, you may be responsible for out-of-pocket expenses when insurance fails to cover certain costs. Make sure you have a healthcare savings account available to you so that you can take care of medical and health expenses that arise with peace of mind.
Make Informed Investments
Learning to invest with minimal risk is a skill that you may not have developed during your working years. As you head into retirement and no longer have the luxury of a paycheck, it’s even more important to make valuable investment decisions with available funds. In a post on Forbes, Mitch Tuchman of Rebalance IRA recommends building a ‘risk-adjusted portfolio’ with a mix of stocks and bonds, foreign equities, commodities, and real estate. Working with a financial advisor can help you determine what your best options are for your portfolio and help you make more informed investments throughout retirement.
Consider Getting a Part-Time Job
Results of the 2014 Retirement Confidence Survey from Principal Financial Group reveal 65% of workers expect to work for pay in retirement and 27% of retirees actually do end up working for pay during retirement. If you want to pay off debt, enjoy some personal or luxury purchases, or just build up another savings fund for your family, consider getting a part-time job to earn some extra income through your retirement years.
Hold Off on Social Security Benefits
AARP reports approximately 23 percent of people 65 years and older live in families that depend on Social Security benefits for 90 percent or more of their income. Americans are eligible to start using Social Security benefits when they reach 62 years of age but delaying benefits can increase retirement benefits by up to 30% or more.
If you are getting ready for retirement or want to make more informed decisions about your investments during your working years, talk to one of our financial advisors at Boston Asset Management. We are dedicated to making your retirement plan as successful as possible. Contact us today.
This content does not constitute a recommendation that any particular investment, security, portfolio of securities, transaction or investment strategy is suitable for any specific person. To the extent any of the content discussed may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person. This content is for informational purposes only and is not a substitute for personalized advice. Effort has been made to ensure the material presented is accurate, however no guarantee can be made as to its accuracy. This material is not meant to be an exhaustive and all-inclusive explanation of the circumstances discussed.