Considering retirement can feel overwhelming. Am I ready to leave the workforce? Do I have enough money saved? If these are questions you've asked yourself, hopefully, this blog will bring you ease. Here are five things you need to know before you retire.
Knowledge is gold
Making informed decisions in different planning areas can increase your income by 31%. Invest the time to learn your options. Consider it as "sweat equity" into your retirement. The main areas to focus on are Social Security claiming, choosing the right Medicare options, and the role of guaranteed lifetime income. If you are seeking advice from an adviser, we encourage you to reach out to one who has earned the Retirement Income Certified Professional (RICP®) designation, as they are most likely to understand the issues faced during this phase of life.
Have a plan
Taking a leap of faith and taking chances can lead to an exciting life; however, retirement is not the place for risks. Did you know 58% of baby boomers claim ignorance when it comes to how much money they need for retirement? Having a plan before leaving your job is essential for a few reasons. First, leaving a long-term career also means giving up additional retirement benefits like health insurance or retirement fund contributions. Second, after you've retired and decide you don't have enough money or you miss work, finding a comparable job with the same wages at an older age can be challenging. Look before you leap.
Three areas of focus for success in retirement
Retirement age – The longer you work, the more money you'll have in retirement. It seems very logical, right? According to a study from the Stanford Longevity Center found that as little as three additional months of work can generate the same increase in retirement income as saving an extra one percent of earning for 30 years. Workers currently age 66 could increase their annual retirement income by 7.75% by working one more year. Workers currently age 62 could increase their retirement income by almost one-third by working four more years, and by nearly three-fourths by working until the age of 70!
Social security – Defer Social Security. If you have done any research about retirement, this is not new information. Deferring Social Security will increase your retirement income. For example, an individual with a full retirement age of 66 will receive 76 percent more by claiming at the age of 70 instead of 62.
Spending levels – Reducing retirement spending will make your resources last longer. Make wise purchase decisions and stop buying stuff that doesn't matter to you. Become a thrifty shopper and control your living expenses.
Find more income
Living on withdrawals only can be nerve-racking. Most people in retirement live off of Social Security benefits, a 401(k), and a savings account. Social Security won't be enough to cover living expenses (especially for those who don't defer), and if you have a volatile 401k, withdrawals can be causing a lot of sleepless nights. Consider ways you can increase a regular income that will last a lifetime. Deferring Social Security to the age of 70 will automatically increase your monthly income. Another place to look for additional revenue is annuity payments either from a company retirement plan or a purchased commercial annuity.
Predict the future
Now, we know you can't actually predict the future, but you can plan for certain unforeseen circumstances. This worksheet here from the American College of Financial Services outlines 18 common risks faced during retirement from living longer than expected and inflation to encountering a sick spouse and unexpected medical bills. It is encouraged by (RICP®) advisors to review, consider, and plan for possible scenarios.
All of these informative points boil down to having a plan before committing to retirement. There is not a precise formula for a successful retirement. It takes research, planning, and commitment to set you up for a relaxing, fun-filled retirement no matter what that looks like for you. Thousands of retirees from across the country have chosen Twin Lakes Community as their retirement destination. Located in Burlington, NC between Raleigh and Greensboro, it boasts a mild climate and an active, engaging environment. Twin Lakes Community is a Continuing Care Retirement Community (CCRC) that also offers assisted living, skilled nursing, and memory care. Twin Lakes is fully accredited by the Commission of Rehabilitation Facilities-Continuing Care Accreditation Commission (CARF-CCAC), which is the only accrediting body for CCRCs and other types of aging services in the nation. Learn more about the amenities and activities available at Twin Lakes Community in Burlington, North Carolina, where independence and community are treasured. Schedule your tour of our community now by calling (336) 538-1572.