Retirement can be one of the most enjoyable stages in your life. You work hard throughout your career so you can eventually live your life without the nine to five grind every day. As with any major life change, the shift into retirement can be a bit anxiety inducing. There are looming questions: will I outlive my money? how will I pay for healthcare? what if I still have debt?
If you ponder these questions now and again (or maybe quite often), you are not alone. These are common concerns about retirement. The good news is that thinking ahead puts you in a good position for when you get there. Address these concerns now with a healthy financial plan and retirement will be a breeze.
Four Retirement Concerns And The Solutions
Worry: Will I be able to pay for healthcare?
Solution: Stay insured, use a Health Savings Account, and purchase long-term care insurance.
Bankrate.com conducted a survey in 2015 that says 28 percent of people worry their medical expenses will be too high during retirement. Begin by tracking current health care expenses. This gives you a general number to plan around, but it won’t be set in stone. Many people pay more visits to the doctor as they age, so this should be calculated as a starting point.
Medicare and Medicaid are healthcare insurance supplements for older citizens, but they only cover about half of the necessary costs for most people. The most important piece of advice is to stay insured. If an employer-sponsored plan is no longer available, check out the plans through the Affordable Care Act’s health care marketplace.
Another tip to prepare for health expenses is to open a Health Savings Account (HSA) now. This is an additional fund you may use for healthcare costs and other medical expenses throughout retirement. Many employers offer a high-deductible insurance plan with an HSA. Start saving in the HSA as soon as possible to reduce the burden of additional medical costs in your later years.
Finally, you may want to consider purchasing long-term care insurance to cover the expenses that may be required if you ever fail to care for yourself. However, this step is not a necessary one, and if you are under the age of 60, may not be the best use of your income. Work with your financial advisor to determine whether long-term care insurance is the right fit for your retirement plan.
Worry: Will I outlive my savings?
Solution: Use a personal retirement calculator, contribute up to the maximum amount for savings accounts, and meet with a financial planner to build the best plan for a long retirement.
Today people are living longer than any other generation before. That doesn’t mean everyone is going to outlive their savings, though. Since we know the life expectancy continues to extend, financial experts help individuals estimate how much money is necessary to cover a long retirement. There are a plethora of strategies to use to save more money and reallocate assets to make sure you’re on the right track. A quick financial planning meeting can help ease these worries. For starters, you can use a retirement calculator to determine if you’re on the right track; get in touch with the Anchor Wealth Management team for personalized financial planning tools. Additionally, make sure to contribute the maximum amount possible to your retirement accounts, including any catch-up funds if you are over the age of 50.
Worry: Will I have a steady income stream?
Solution: Work as long as you can to suspend withdrawing from Social Security early, save independently as if you won’t receive Social Security, and take advantage of pensions and other benefits available.
Almost one-fifth of Americans are worried they will not have a steady income throughout retirement, according to the Bankrate survey. The unknown status of Social Security availability in the future is one primary reason for this worry. Truthfully, nobody can guarantee that Social Security will be accessible or be enough to cover all expenses. Therefore, it is recommended to save additionally on your own — as if you will not have any Social Security payouts — and then you can use S.S. as a bonus if it works out in your favor. Remember: a few more years on the job can suspend the need for Social Security and other fund withdrawals.
Additionally, take advantage of any available benefits or pensions that can supplement what you save independently. Many people make lifestyle adjustments during retirement to live in a more frugal way — this is not necessary. Proper planning means you’ll have the right income to sustain your current lifestyle, even after your working days are done.
Worry: Will I owe too much debt?
Solution: Pay off consumer debt before you enter retirement.
Bankrate says 10 percent of Americans worry about debt in retirement. Unfortunately, the average amount of debt for a 65-year-old has risen in the past decade. On average, a 65-year-old carries $48,000 worth of consumer debt into retirement. The easiest way to ease this anxiety is to pay off as much — if not all — of the debt even before investing for retirement. Our goal, at Anchor Wealth Management, is to help you create a financial plan that moves you toward paying off all of your debt except for your mortgage before focusing on investments. Head into retirement debt free because statistics show that people who enter retirement already indebted increase their debt by about 60 percent between the ages of 50 and 80.
There are many ways to tackle debt pay-off. Stay tuned to our blog for some suggestions in a future post. Or you can visit with a financial coach for a personalized strategy.
Ultimately, retirement is about letting go of life’s worries and enjoying the things you’ve always wanted to do. Help yourself enjoy your golden years by planning ahead for a good financial foundation.
Anchor Wealth Management is a local financial services firm with offices in Lanark and Rockford. We can help you create a personalized retirement plan. This plan can ease any worries you may have about your future. Our team specializes in doing right by people, so we’ll tailor our advice to your life specifically. We begin with the end in mind to make sure we build the right plan to get you where you want to be.