|
|
|
|
By Susan K. Gower When our ship comes in… How many years have you been dreaming of the day when you will retire and live the life you always imagined? Dreams are wonderful, but it takes careful planning to make your dreams come true. Ideally, your planning should have started on the day you started your first job, but most of us are not that far-sighted. According to LaRhae Knatterud, Director of Aging Transformation for the Minnesota Department of Human Services, “only 10-15 % of the population is planners – people who are thinking ahead.” Why do we tend to procrastinate? Partly because planning for retirement can be overwhelming. There are key financial decisions to make, as well as choices regarding health insurance, wills, health care directives, living arrangements…the list goes on and on. Some things need to be dealt with early, to reap the most benefit. Others can be put on autopilot. Instead of making a comprehensive list and then filing it away to deal with at some future date, try thinking of your retirement planning as a timeline. By age fifty, many of your major expenses, such as buying a home and rearing children, are behind you. Your earnings may be at their peak and retirement is just around the corner. This is a good time to focus on accumulating money. Start by looking at your financial situation – where are you now and where would you like to be in the future? Organize your filing system, review all financial statements, employer plans and Social Security statements for accuracy. Accumulate and invest as much as possible. Everyone’s situation is different, but experts recommend saving 15% of pretax income. If you are getting a late start on your savings, you will need to increase this amount. Also take time to review your will, health care directive and other estate planning documents with an estate planning attorney and make any necessary changes. You may also wish to consider long term care insurance. The term “long term care” refers to services beyond medical care. These services can include, for example, help with daily activities such as bathing and dressing, community programs, such as adult day care, assisted living services or care in a nursing home. Long term care insurance is not for everyone, but it is something everyone should seriously consider. These services can be extremely expensive, so having a long term care policy can allow you to make choices about what kind of care you want.
If you have been reviewing your financial situation regularly, you should know how much money you have accumulated and you can begin to estimate how much money you will need. Experts estimate you will need 70-80% of your current income to maintain your standard of living in retirement. In order to do the math, you’ll need to have a target retirement date, because how much money you’ll need and how much you’ll get (from Social Security and other options) depends on this. Not sure if your budget will work? Try it out for a few months. Live on the budget you would have if you were really retired, but don’t forget to keep going to work every day! The AARP says that by setting an investment goal you are simply trying to get somewhere with your money – just like planning a trip. “Knowing your goal means everything in money management,” according to the AARP’s retirement planning advice. “If you don’t know where you want to be, you won’t know how to get there. And you won’t know how to avoid or minimize the risks along the way. You may not even recognize the risks at all.” But you need to stay flexible, in case the day you’d like to quit – or phase into part-time work – turns out to be too early. As LaRhae Knatterud says, “How do you pay for health care if you do not have a job with benefits or you are not yet age 65? That’s one of the biggest risks and issues. There are not always a lot of good answers, but you need to think about all the possibilities before leaving job.” Working even a year or two extra can increase your retirement income enormously. But if possible, you want to be in a position to retire when you are ready to do so. Financial analysts also suggest that as you approach retirement age, it is the appropriate time to make sure that legal documents are up to date and reflect your current and future lifestyle changes. Consider the unthinkable. What if you became physically or mentally incapacitated–a risk that increases for all of us as we age. Can you pay for your medical and other care needs? Who will help you manage your affairs? The time to plan for these contingencies is before you need the help and while you can still make your own decisions. Once you have lost the ability to make your decisions or communicate them effectively, it’s too late. Start by consulting an attorney and learning more about all the important legal planning tools available to you, including wills, durable powers of attorney, trusts, health care directives, funeral planning and organ, eye and tissue donation. At age 70 you should again consult your financial planner and take the proper steps to assure that your investment goals are realized. You may wish to discuss investments which would provide a guaranteed income. It is also time to check out your health status and adjust your plans and budget accordingly. If you have been planning during your 50s, 60s and 70s, most of the important decisions will be done and you can coast. Now all of your hard work and planning pay off. Enjoy! Assorted Senior Services Social Security Medicare General Information Medicare Supplemental Health Insurance Elder Law Issues Legal Aid Taxes, Federal Taxes, State How Much to Save Ballpark Estimate Calculator Planning Ahead for Incapacity
Assorted Senior Services Social Security Medicare General Information Medicare Supplemental Health Insurance & Long Term Care Insurance Elder Law Issues Taxes, Federal Taxes, State How Much to Save Planning Ahead for Incapacity
|
Don’t Miss the Boat