As 2021 is settling in, you may be ready to settle down. Retirement has been on your mind for a while now. You either think you’re ready to take on the action now or want to prepare for it later. If you don’t have a retirement plan, then you’re not ready. There are many things you may want to consider before retiring. Otherwise, you miss the major benefits a retirement plan will bring to you when you’re retired.
Do you know where you are on the road to retirement? If not, you must create a plan to find out as soon as possible. Planning ahead of time can be very beneficial in the long run. This is a big challenge sometimes too hard for to take on, even though help is provided. Don’t let that be you.
When planning, you must set money-saving goals for yourself. Use that to help set the path for a successful retirement. You need to consider the many expenses that are to come later down the road. Don’t allow them to be curveballs. Instead, have them be accomplishments that you’ve prepared for years before retiring.
You’re not alone in planning this. This article will guide you through the road of retirement and teach you many things you need to know.
In this article, you will read about the importance of creating a road to retirement. There are so many things to consider, so we provided a road to retirement checklist for you to use as a guide. Then we list some retirement programs for additional information and provide some insight on retirement in 2021.
Road to Retirement Checklist
Set Realistic Financial Goals for Retirement
Setting financial goals is a critical step toward being financially secure. You might spend a lot more than you should if you’re not working towards a goal. You’ll then come up short on money when you reach your retirement stage. It helps to create an emergency fund. That’s when you put aside money meant for paying for unexpected expenses.
When your goal is met, you can expand it so that your fund can cover larger expenses.
It’s important to prioritize so you know what to fund first. If funds are tight in a certain month then you know where to place your money
Make a Budget and Stick to it
If you don’t have a budget, then you need to make one. You can create a budget by looking through bills and bank statements within the year. Then you can place each expense into a category on paper. Prioritize the essentials like food, housing and healthcare. Then you can use what’s left for leisure and savings. This will help prevent you to overspend and under-save.
Estimate the Cost of a College Education for Children and Other Family Members
Attending college will be an important part of your child’s life. But for you, it’ll be the most expensive. If your child or grandchild is attending college sometime in the future, then set a target date for a college savings goal. Consider many factors like tuition, room and board when deciding how much money to put aside.
Unfortunately, there’s no way to know exactly how much money will be spent on college before your child is even accepted into one. But some colleges provide net price calculators on their sites to give students and parents an estimate of how much they’ll be spending.
Review Your Life Insurance Policies
When you retire, you are provided with the option to keep paying for the life insurance you had when working, or buying your own. One that has no connection to your employer. Normally, the inexpensive life insurance offered at work becomes more expensive once you retire. Insurance companies offer you different policies that you should look into years before retiring.
Maximize the benefits received from owning your life insurance during retirement. This will ensure that you enjoy your freedom when you’re no longer working. The best option to consider is permanent insurance but should be gotten long before you retire. This assures you that your family is financially secure when you’re no longer here.
Review Your Pension Benefits
It is often to receive one pension statement each year. One of the things your statement shows is if your pension has benefits. If your statement shows a pension value when retired then you likely have a defined benefit pension.
Assess Your Savings, Including Retirement Savings
The savings factors linked to your income and age should determine how much money you should have saved. This way you can create a savings goal and track your progress for retirement through the different stages of your career. To attain a good lifestyle when retired, you should replace more than half of your current income in retirement.
Review Your Annuities and Retirement Savings Accounts.
Annuities are investments put into insurance policies. You pay a premium overtime or all at once. That money is then invested by the insurer, while the insurer pays you guaranteed payment overtime. This payment starts at a certain time and lasts for a certain amount of time or your entire life.
With a retirement savings account, you could purchase mutual funds, stocks, bonds or other assets to build up a retirement fund. You can use this savings account to purchase annuities.
Think About Where You Would Like to Live in Retirement and Research Costs
One of the most important things a pre-retiree should do is determine if moving is necessary or not. If your current living situation is affordable, by family and friends, near activities and you have no mortgage then it’s not necessary to move.
If your living situation is not any of the above then it might be best for you to move. If you’re trying not to spend too much on a local move then try selling your home at a profit. If money isn’t a problem then consider more vacations, or moving to an area you desire.
Review Your Social Security Information
When creating a retirement plan, you may wonder how much you’ll get from Social Security. With a personal Social Security account, you can receive estimates on your retirement benefits and view different retirement age scenario effects.
Through your account, you can also gain access to the online Social Security Statement. It provides you with retirement benefits estimates at age 62, the full retirement age and at the age of 70. If you don’t have an account then you can create one on the Social Security website.
Review Your Medical Insurance Needs and Options
Your goal should always be to stay healthy. Once you retire, you should be able to focus more on your health. This may require you more doctor visits for routine checkups and tests. Sadly, your health may decline as you get older. Therefore, your need for treatments or expensive prescription drugs will increase.
This can also cause an increase in medical bills. This may be bad timing, for you will retire, losing all of your employee health benefits. In this case, you need health insurance. One that meets your budget and needs.
There are two parts of Medicare coverage. Part A is premium-free and covers inpatient hospital care. Part B is premium and covers medical expenses such as physical therapy, laboratory tests and physician care. Note that Medicare will not cover everything during your retirement. You’ll have to pay a deductible quite large while making co-payments for specific types of care.
Road to Retirement Program
For additional help on creating an easy path to retirement, view these road to retirement programs:
- The Retirement Toolkit
- Medicare & You: Understanding Your Medicare Choices
- Your Retirement Income: Prepare For Later | Fidelity
- What is a Defined Contribution Account?
Rough Spots On The 2021 Road To Retirement
There is a lot to consider when thinking about retiring. Your plan of retirement may contain some bumps down the road without you even realizing it. For some of you, 2021 could be another tough year. This is especially due to the very long, difficult year we recently managed to escape from.
Thousands of postal and federal employees have ended their careers and are opting for retirement, since January of this year. While planning ahead for this major decision is the best thing to do, many of you haven’t been doing that. Planning for the future is critical.
Next year, the stock market could be volatile. This may result in you experiencing major losses that are hard to recover from when taking retirement withdrawals. This only emphasizes the importance of entering retirement with a year’s worth of saved cash for your living expenses.
The road to retirement can sometimes be long, and bumpy. But that’s only if you allow it to be. Make the best decision you can make by creating a retirement plan that will benefit you in the future.
Retirement planning can often at times be stressful and overwhelming. Do not avoid getting the necessary help you need to accomplish this task. Seek a professional. Better yet, use this article as a guide to help you in having a successful retirement. For more information, visit our site or contact us today.