Preparing for retirement with smart calculated moves will give you the best chance to enjoy yourself as a retiree. Building and protecting your wealth is just a part of life. No different than working on your relationships, maintaining a house, or improving your health.
And we are going to look at smart moves that make things easier on your future self. The one who will be retired and is depending on you to make that happen starting now. No pressure, just solid financial planning is all it takes.
Let us begin with planning for the worst.
Long-term Healthcare Preparation
One of the wisest steps you can take is to make sure you defend yourself and your partner against long-term health disasters. Healthcare costs are through the roof and never go down at the end of the year, right? But long-term care is even more expensive because when the worst happens, you or your spouse could require 24-hour care, 365 days a year.
So many couples face this due to diseases such as Alzheimer’s and they truly wreak havoc. People with healthy bodies but damaged minds can live for years but not without daily help. Family members are sometimes available to sit with dementia patients. But that’s not always the case. Caring for a sick person 24 hours a day is daunting, stressful, and can feel hopeless.
Neither nursing homes / assisted living facilities or in-home care are cheap. The median cost for assisted living in the United States is about $4,300 per month or $51,600 annually (www.seniorliving.org/assisted-living/costs/ ). That can crush even a giant nest egg. A good defense against these costs is long-term health insurance because it can cover needs such as bathing, dressing, or getting in and out of bed.
This type of insurance can cover diseases that could impact your family over the course of two, five, or fifteen years. Just imagine what the average assisted living costs will be in five years.
Preparing for your Retirement Lifestyle
Remaining in good health is a big win. Plus, we all want to keep at least a similar lifestyle in retirement as we had when we were working full-time. The sad fact is only 40 percent of Americans have calculated how much they need to save for retirement. (https://www.msn.com/en-us/money/retirement/most-americans-are-behind-on-retirement-savings-%E2%80%93-are-you-one-of-them/ss-AAP06gG#image=4 )
That’s a major problem! To not even run the numbers? That is the best way to set yourself up for failure. Ignoring your current situation, any progress, or shortfalls is asking for trouble. No one has the perfect retirement because life is unpredictable. But with no plan in place, your lifestyle will have to be cut back at retirement time.
To know how much you need when you retire, you need to ask yourself what you plan to do once your paychecks stop:
● Travel?
● Work part-time?
● Stay in the same house?
● Move to a city with lower costs of living?
● Dine out or eat at home mostly?
Retirement Planning Timeline
Now, we can control our lifestyle to a degree. But how long our retirement will last is not so certain. We know the average American spends roughly 20 years in retirement. Using that stat gives you an idea of how much money you’ll need to have saved by time you retire.
Many Americans depend on Social Security, but often that money will only cover basic expenses. And inflation is a factor you can’t control. Knowing that, you need a plan for how to cover monthly expenses for 20 years. But you could live to be 90 and need enough money for a 28-year retirement.
Sometimes the smart option is to move your retirement date back. Especially when you see you will run out of money at 75 years old or sooner. There is no shame in that because life happens. But if you are in your 30s, now is the time to plan and take steps to avoid delaying your retirement.
Begin Where You Are
Preparing for retirement can only be done from where you are. Comparing yourself to someone ten years younger does no good. Or contrasting your expenses to that of someone living in the middle of nowhere. Building wealth and having a nest egg is a personal journey.
Your situation may involve college debt that your grandpa did not have to worry about. Maybe you’ve been saving since you were 18. Or just starting to invest at 34. All these variables mean you need a flexible retirement plan and one custom-built for your life and your partner.
Preparing for Social Security in Retirement
Now, as we take a look at how Social Security can prepare you for retirement, what are the facts?
● $1,543 per month is the average amount a retired worker will receive in 2022. Less than $400 per week.
● Healthcare costs alone can take up more than 20% of the average Social Security benefit.
$1,543 pays for more in rural Arkansas than it does in Dallas, Texas. But most couples would have to cut corners and get more government assistance to live on that amount. Regardless, you should know where you stand on your Social Security benefits. Read over your yearly statements and get help understanding them. Knowing your exact benefit amount gives you clarity on your retirement income.
Scam Defense and Protecting Your Health
Besides worrying about the shortfalls of Social Security, we must be aware of two big factors as we age. Scams and health problems. Both can be costly.
Scammers love to target retirees and no one is too smart to be scammed. I know some very intelligent people who have been victims of scams. The criminals use your emotions against you so you will make a rash decision out of fear. The best way to avoid scams is to never make hasty financial decisions and always talk to a trusted family member when in doubt.
As for your health, you can improve it by being intentional. Studies argue that only 30% of the characteristics associated with aging are controlled by genetics. The remaining 70% is controlled by chosen lifestyle factors. Walking, swimming, biking, eating our way to feeling better and saving money on healthcare is smart and a win-win, don’t you think?
Preparing for Retirement’s Loose Ends
Lastly, do you know what the smartest retirees do? They tie up loose ends before they retire. Little things that avoid conflicts and hurt feelings later on. Having a proper will drawn up is a must. It is uncomfortable but I can think of no one who wasn’t glad after getting this done before retirement.
Discuss some things with your loved ones so there is no confusion. For example:
● Do they want the family home?
● Who wants which sentimental items?
Many people avoid tying up loose ends even though they were very diligent with every other financial decision. The reason why is because it is uncomfortable. The bad news is when you avoid having a will in place, your family is still left to sort everything out eventually.
Final Thoughts
Getting ready for retirement is a life-long challenge. Start where you are and work together with your spouse. Be flexible with your plans and know your budget both today and as far into the future as you can estimate.
Social Security, inflation, your location, lifestyle, etc. all play a role in what your retirement will be like. To handle those variables you must use all the retirement tools and guidance at your disposal.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investments or strategies may be appropriate for you, consult your financial advisor prior to investing.