Did you recently enter your 50s? If so, you may see retirement quickly approaching. It’s hard not to look ahead when retirement is so close. However, you also may want to use this period to nail down the final steps of your retirement planning. The last few years of your career may be your last opportunity to boost your savings, cut your costs or protect yourself against risk.
Below are a few steps to consider before you head into retirement. If you haven’t yet taken these steps or even developed a retirement strategy, now may be the time to do so. A financial professional can help you implement these steps and others so you can enjoy a long, financially secure retirement.
Do you have a retirement strategy? For many people, retirement planning consists of contributing to their 401(k) plan or IRA every year. When you’re young and have many years until retirement, your strategy should focus on savings and asset accumulation.
As you get closer to retirement, however, you may want to think about more than just the dollars and cents of retirement. It’s important to save assets, but it’s also important to consider how those assets will be used when you leave the working world. That means planning your lifestyle and your activities during retirement.
Below are four questions you may want to ask yourself as you develop your retirement strategy. These questions can help you think beyond the financial aspect of retirement and focus on lifestyle, relationships and even your health. That could inform your decision-making as you approach retirement.
According to a recent poll from Nationwide, 60 percent of small-business owners don’t have a succession plan in place. Among those without a plan, nearly half believe such a plan isn’t necessary.1
Are you among those without a plan? If so, you could be creating significant liability for yourself, your business, your employees and your family. A business succession plan helps you make a smooth transition to the next owner without disrupting business operations.
A succession plan also protects your interests. It helps you get fair value for your business and even retain some form of control or income. You can use your plan to identify the right successor and to make sure the next owner doesn’t deviate too far from your long-term vision.
Unfortunately, without a plan in place, you may be forced to sell your business to the best available buyer. That could mean accepting less than fair value or selling to someone who has plans for the business that don’t align with your interests.
Worried that you won’t have enough money for retirement? If so, you’re not alone. According to a recent study from Gallup, retirement is a major worry for many Americans. The study found that 54 percent of respondents were worried that they won’t have enough money to fund their retirement.1
There could be good reason for concern. A study from the Economic Policy Institute found that the average American adult has less than $100,000 saved for retirement.2 While that’s a sizable sum, it’s far short of the amount many retirees need to live comfortably.
The good news is that it’s never too late to correct course and boost your savings. By making a few changes to your savings strategy, you could significantly improve your odds of funding your ideal retirement. Below are three tips to help you increase and protect your retirement savings:
Are you approaching retirement? Have you developed a projected retirement budget? If not, now may be the time to do so. It’s an important financial tool that can help you manage your spending and preserve your retirement assets. You can use your budget to plan for a wide range of expenses, such as housing, utilities, taxes, travel and more.
One expense that should be included in your budget is health care. Many retirees assume that Medicare will cover all of their health care expenses. The truth is there are many medical expenses that aren’t covered by Medicare. In fact, Fidelity estimates that the average retired couple will spend $275,000 on out-of-pocket medical expenses.1 That figure doesn’t even include the cost of long-term care.
If you don’t plan ahead, medical costs could blow a hole in your budget. The good news is you can take action today by developing a strategy. Below are a few of the types of health care costs you may face. Use these to estimate your cost exposure and build your budget.
Thinking about when you should file for Social Security benefits? It’s an important decision, because it’s permanent. Once you start receiving benefits, you can’t change your mind. If you file early, you’re likely to see reduced benefit amounts. Similarly, if you delay your filing, your benefit amount will be increased.
You’re eligible to file as early as age 62. However, your benefit is permanently reduced if you file at any point before your full retirement age (FRA). Most people reach their FRA between their 66th and 67th birthdays.1
However, you can wait past your FRA to file for benefits. In fact, you can delay your filing as late as age 70. For each year you wait past your FRA, your benefit amount increases 8 percent. Conversely, your amount could be reduced as much as 25 percent if you file before your FRA.1