Whenever you’re able to retire, there are a couple of decisions you will need to make relatively soon. This can be a confusing and frustrating process that is stress-inducing, especially if you don’t know where to start. That’s why it’s important to recognize what you need to do before you begin the planning process.
This article will introduce you to 10 of the major decisions you will have to make upon your retirement.
Can you afford to retire? This may seem like a silly question, but there are many people who, unfortunately, can’t afford to retire whenever they reach the full retirement age. And no one knows your financial situation like you do. Luckily, there are multiple ways in which you can answer this question.
To have an effective answer, there are a couple of things you will need to do. These include:
Calculate how much you spend annually, and on what. There is hardly a day that goes by where we’re not spending money. You are typically purchasing things like food, clothes and experiences. You’re also expected to pay insurance premiums and bills, whether they be home repair bills or your typical water bill. Figure out how much of your money is going toward these necessary payments, and how much is going toward “fun” things. If you find you’re spending too much money on going out to eat, then you have a place to start cutting back. Additionally, when looking into your bills, see if there is a way in which you can reduce your payments. Whether that be by switching internet providers or using less electricity, it can be done.
BONUS: Compare how much you spend during the regular calendar year with how much you’re spending on the holiday season. A lot of the times, your spending habits during these months will reveal much more than you expected.
Determine your sources of income. How much money you make is an integral part of determining whether you can afford retirement. Determine how much money you make in your job, as well as how much money you made from any side jobs, too. Doing this will allow you to be realistic about how much you can spend, an whether you truly can afford retirement. Meet with a financial adviser to gain any insight as to how you can better prepare yourself for your retirement.
Will you change your living situation? You will need to determine whether you plan to stay in your current home throughout retirement, whether you will downsize or whether you will move in with a family member or into a retirement community. If you plan on living in your home for the remainder of your lifetime, then you may want to consider a reverse mortgage. If you plan on moving into a retirement community or downsizing, then you will want to figure out what you will do with any excess items that will not be able to fit in your new residence. Will you donate them, tore them, gift them or sell them? Sit down with your spouse and loved ones to talk about what is the best decision.
When do you plan on collecting Social Security? The earliest in which you can collect Social Security is the age of 62. The latest age that you can collect Social Security is 70. You may have heard this a few times before, but the longer you wait to collect, the more money you will receive on your benefit. However, that doesn’t mean you must wait until you are nearing 70. In fact, according to the Social Security Administration (SSA), 34.3% of eligible seniors collect their benefits at 62, while 18.1% collect it at full retirement age (66), and only 3.7% collect it at 70.
You may be wondering why people don’t just discipline themselves and wait until they’re 70, and that’s a valid question. The reason why lies within everyone’s financial situation, as well as their health situation. Someone who is in good financial standing, and is equally as healthy, can most likely afford to wait on his or her Social Security benefits. However, someone who has quickly-deteriorating health due to a chronic illness or injury, and is struggling to find a way to pay for treatment, may need that money now more than ever. Other people pull from it early because they can’t predict whether they’ll make it to age 70. It all truly depends on what your health status and financial stability is.
Sit down with your loved ones, or a local licensed agent, to determine what is the best plan of action for you. Thinking out loud will allow for others to offer input that you might not have considered, and it could get you one step closer to your decision.
How are you going to afford health care costs? If you are over the age of 65, it’s likely that you’re enrolled in Medicare. And if you’re coming up on your 65th birthday, then Medicare is something you’re going to want. Delaying could result in late penalty fees.
You must ask yourself about how you plan for paying for your Medicare or other health care plans. Luckily, there are multiple ways in which you can do this. The first solution may sound tricky, but it will provide many benefits. And that is to stay healthy. The healthier you are, the lower your health care expenses will be because you will have less medical problems to address. This is maintained by regularly exercising and eating sensibly.
You also have a better chance of affording your health care costs by staying in-network. What does this mean? Well, in your health plan is a network of doctors who are within it and accept your form of health care coverage. Stick with the doctors who are in this network and avoid trips to those who are not. Otherwise, you’re stuck paying for a service that your insurance doesn’t cover.
A third solution is to always get second opinions. If you are being recommended for a knee replacement, you may want to consider a second opinion. Otherwise, you could be subject to many expensive tests or medical treatments that could have been avoided. Now, if your knee is giving you pain, you may not need to get that second input. But if this is news to you, it’s something to think about.
There are multiple ways in which you can afford your health care costs. We recommend meeting with a financial specialist or local licensed agent to figure out the best move for you.
Are you going to invest? Whether you decide to invest during your retirement years is completely up to you. There are those who greatly advocate for it, and then there are those who will greatly warn you about it. For brevity’s sake, we will be focusing on what most seniors who invest do: invest into the stock market. Those who advocate for this encourage seniors to invest because it is a quick and easy way to grow your nest egg. However, others will warn that you have a higher risk of losing the money that you’ve invested.
If you decide to invest, you will want to first identify how much you are willing to lose. Make that your risk-cap, meaning you will not invest any more than that amount of money over a certain period of time. You will also want to research into the different kinds of investments you can make, as well as which companies seem like the promising fit for that.
What is your retirement budget? In other words, how are you planning on spending your money when you reach retirement? This is something you can quickly determine with a financial specialist because he or she will be well-acquainted with your income and spending habits. The financial specialist will then be able to help you plan out how you can spend, save and/or invest your money throughout your retirement.
What Medicare plan are you going to choose? Now, some people are already enrolled in Medicare by the time they retire. And some people are automatically enrolled into Medicare Parts A and B on special circumstances, so it’s possible that this isn’t much of a decision you have to make. But deciding on whether you want to sign up for Medicare Part D, or choose a Medicare Advantage plan, is a decision you will need to make if you retire before 65.
Do you have a will prepared? A will is needed for most — if not all — people, especially those who want to pass their things down to loved ones. In order to prepare a wil, you will need to complete a few key steps. The first is deciding what kind of will is applicable to you. Most people simply utilize a simple will, or even a last will and testament. You will then need to determine what will be going into the will you have chosen. This list can include property, personal belongings, financial accounts, etc. Then you will determine which beneficiaries will be receiving what. It’s important that you are specific during this part, so that your loved ones can avoid confusion and tension.
Once you have determined these core steps, you need to sign your will — in your handwriting — in front of people who can witness it. Depending on where you live, this may have to be at least two people. However, your witnesses cannot be beneficiaries or guardians, should you have one. Rather, they can be just about anyone else, ranging from a former co-worker to your neighbors. Once you complete signing it, keep your will in a safe place. This will prevent damage to it and it will be readily available whenever needed.
Should you consider long-term care insurance? When you get older, you’re going to need assistance with bathing, cooking, cleaning, dressing and more. That’s normal and is expected for most people who live well pas their 80s. But before you do so — should you decide to purchase it — you will need to discover how many years you will be insured for, and what the advantages and disadvantages are.
On average, people utilize this insurance for three years. An advantage to this is that it relieves you of any financial stress if you or a loved one need this service. A disadvantage to long-term care insurance is the fact that your premiums can be subject to increase, and this can happen at any time. This is a large disadvantage for those who never end up using this service.
What is your preferred method of paying for services? By services, we mean bills or premiums that you are expected to pay. With a good portion of business interactions happening online, you have a whole new way of paying for your services. However, most seniors prefer to stick to the classic mail-in option for bill and premium payments.
Determine how you want to pay for your services and figure out how you would do so. For example, Medicare.gov offers four different payment options:
Pay online through your Secure Medicare account.
Pay directly from your savings/checking account through your bank’s online bill payment service.
Sign up for Medicare Easy pay, a free service that automatically deducts your premium payments from your savings or checking account each month. You can expect this to happen usually on the 20th each month.
Mail your payment to Medicare via check, money order, credit card or debit card. There will be a coupon that will come in your bill. You must fill this out, or else your payments could be delayed. If you pay with credit or debit card, fill out your account information and the expiration date, as well as sign the coupon.
Mail your payment — and your coupon — to:
Medicare Premium Collection Center
PO Box 790355
St. Louis, MO 63179-0355
There are a lot of decisions that you are going to have to make throughout your retirement. Take it easy on yourself and plan for these decisions ahead of time, so that you are not drowning in the decision-making process at a time where you should be kicking back and relaxing.
If you have any other questions or concerns about the decisions you will have to make upon retirement, don’t hesitate to contact The Best Senior Services (TBSS). At TBSS, we strive to educate seniors about Medicare and other financial services. You can get in touch with us by visiting our website or calling us at 855.979.8277 today!
The Best Senior Services – P.O. 1170, Owasso, OK 74055
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