Thinking about retirement? Here are a few pointers to look into before making the decision:
Source: nefe.com
Work
- If you are healthy, don’t stop working until you prove you can afford to.
- Aim to work at least until your full retirement age (66 to 67). It produces many benefits, including prolonging any health-care coverage you may have, building your retirement assets and increasing your ability to reduce your debt
- If you are considering phased retirement, know what impact scaling back will have on your retirement income, health-care coverage, job security, and other life situations.
- Part-time work is a good way to supplement your retirement income.
Social Security
- Deciding when to begin taking Social Security benefits is one of the key decisions that etermines if you will have enough money for your retirement years. If you are nearretirement age, it is not wise to make decisions about how you should pay for retirement ased on fear that the U.S. Government can’t afford Social Security payments.
- The earlier you take your Social Security benefits, the less monthly income you will receive during your retirement years. If at all possible, do not begin taking Social Security until you are at least your full retirement age (66 to 67). If you take Social Security benefits at age 62, your benefit will be approximately 25 to 30 percent less (depending on your age) than if you had waited until your full retirement age.
- Claiming Social Security at age 70 produces a monthly payment that is at least 75 percent higher than if you started taking benefits at 62.
- If you wait to receive benefits until after your full retirement age, your monthly benefit continues to increase until you reach age 70. If you delay receiving benefits until age 70, you’ll get 132 percent of\ the monthly benefit you would have gotten at your full retirement age (66 to 67).
The House
- A house may be your biggest asset, but be careful about viewing the value of your house as if it were your retirement plan. Housing prices fluctuate. You need other forms of savings.
- If at all possible, plan to pay off your mortgage before you retire.
- Reverse mortgages may be useful in some situations, but make sure to thoroughly investigate all charges, fees, and other options. The amount you will be able to borrow is usually based on a number of factors including age, equity in your house, and the prevailing interest rate.
- Plan so that you do not need to use home equity. However, if it’s necessary, the way you use your home equity to help pay for your retirement years should not be an emotional decision, but one based on research and your personal needs. As in all complex financial matters, get advice from a qualified financial planner about your best options.
Insurance Products
- Use your employer-provided health-care coverage as long as possible. Then, after age 65,purchase Medicare Parts B and D. Part B covers most doctor, hospital, and related expenses. Part D provides a prescription drug benefit.
- Understand that Medicare is not a free pass; in fact, it may only pay about half of your health-care expenses. Still plan to save for out-of-pocket expenses and premiums, some say as much as $225,000.
- Examine long-term health-care insurance options carefully to make the right choice for you. It is wise to get unbiased professional advice about all of your options.
- Insurance companies sell many forms of annuities (financial products that provide a guaranteed monthly income for your lifetime). Study them carefully. It may be a good idea to have some portion of your savings in an annuity, but they come with different costs, benefits, and provisions. Study and compare these products carefully. If you buy an annuity, get one at a reasonable cost that is adjusted for inflation.
- Don’t purchase insurance or investment products unless you understand how they work.
- Most retired Americans do not need life insurance, except perhaps to cover burial expenses.
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