Planning for Retirement: 3 Things You Should Plan For

Image Source: Unsplash | Planning for Retirement: 3 Things You Should Plan For | According to the U.S. Census, all members of the baby boomer generation will be over the age of 65 by the year 2030. The average retirement age in the U.S. is 65 for men and 63 for women. Needless to say, the country is about to see a big boom in the next several years of individuals choosing to retire and start the next chapter of their lives. 

But if you’re planning on retiring within the next few years, it’s important to plan ahead as much as possible. 

The average cost of living is different across the country depending on your location, who lives with you, and any outstanding expenses you might have. But, no matter when you plan to retire, being prepared is the most important key to making sure you can do so with ease. After all, no one wants to have to worry about making ends meet once they retire because your financial situation isn’t what you thought it would be. 

So, how can you make a concrete plan for your retirement, and use it to ensure you’re going down the right path? Let’s look at a few major things you should plan for. 

1. Your Healthcare Coverage

When you have a full-time job, it typically comes with a benefits package that includes health insurance. Some jobs have better offerings than others, but this is fairly standard. So you might be used to not having to worry about your healthcare coverage. 

When you’re retired, however, that’s a different story. 

Because your employer will no longer be paying for your healthcare coverage, you need to consider whether you will purchase your own private insurance or take advantage of a Medicare plan. You can qualify for Medicare if you are over the age of 65 and retired (or plan to retire). There are different Medicare plans to consider based on your needs, so do your research ahead of time to determine if it’s the right fit for you. Currently, the Medicare Plan G and Plan N are the most cost-efficient options. If you want to keep a private health insurance plan but you’re worried about its high deductible, you may also want to consider a Medicare savings account

2. How Much to Save

Ideally, you should start saving for retirement when you’re young. Unfortunately, Millennials aren’t great at saving because their purchases tend to be emotionally driven, and more than 80% of that generation has at least one form of long-term debt

Saving money in your 30s and 40s can be a crucial component of your retirement funds. That’s especially true if you have a 401k or other type of fund through your employer. Each year, try to boost those accounts a bit by adding more to them. In your younger years, there are also ways you can be more financially stable and start socking more away to save, including: 

  • Increasing your income (working a side hustle, changing jobs)
  • Monitoring your cash flow
  • Consistently planning for the future

If you didn’t start saving for retirement early on, it doesn’t mean you still can’t enjoy it and find financial stability in your older years. But keep in mind that some saving is almost always required to have a positive experience in retirement. 

It’s easy to get confused wondering how much you should have saved. One common suggestion is to save 15% of your annual income each year (while you’re still working) for your retirement accounts. Of course, that works best if you do start out younger. If you are over the age of 50, you might have to play “catch up” by contributing more to your IRA or 401K. You may also have to consider delaying your retirement for a few more years to be more financially stable. 

3. Your Spending Needs

Before you retire, you will need to know how much money you spend regularly. It’s also important to consider how you want to spend your retirement. Many people take up travelling or trying new experiences. Those are great ideas, but they cost money. 

If you’re ready to retire, you still need a budget. It should include your basic home expenses, like: 

  • Utilities
  • Homeowners insurance
  • Emergency fund

But your budget should also account for everything from transportation and food to experiences you want to live out during your retirement years. A good rule of thumb is to limit the amount you spend from your retirement account(s) to 4-5% for the first year, and then make continual adjustments. 

If you’ve never had to worry about a budget before, talking to a financial advising firm can make a big difference. A financial advisor can help you to get organized and choose retirement spending plans that will work for you. 

Ready for retirement? If you’re nearing the standard retirement age and you are anxious to start the next chapter of your life, you’re certainly not alone. But, making sure you have a plan or strategy in place will make your retirement years much more enjoyable and less stressful. Take the time to plan now, so you can relax in the future. 

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