Are you feeling lost in the world of retirement planning? With so many variables and unknowns, it’s not uncommon to have a long list of questions about how to fund your retirement and where to start.
Saving for retirement always sounds like a good idea in theory, but it isn’t always easy in practice.
How prepared do you feel for retirement? Sometimes we are so hyperfocused on making sure we have enough saved up—which is critical to a relaxing and secure future—that we forget to think through the bigger picture.
In fact, while nearly 60% of people in a retirement planning survey said they believe $1 million will last them through retirement, the majority of Americans between ages 40-60 have less than $100k saved.
Let’s explore some of the top retirement-based FAQs and get you on the right track towards a financially secure future.
The amount of money you’ll need to save for retirement depends on several factors. Here’s a couple of factors to consider:
- Lifestyle expectations
- Retirement goals
- Your projected expenses
Using online financial calculators can be a helpful starting point for retirement planning. If you find that you are not generating sufficient income, it may be worthwhile to consult with a retirement-income advisor who can guide you on potential investment opportunities such as stocks and shares. It is recommended to budget conservatively on the road to your retirement to help ensure that you are prepared for any unexpected expenses that may arise.
For those who have retired already or will soon be retiring, it’s recommended to have enough savings that is 10 times your income by the time you are 67. This can seem daunting, but by working with a financial advisor and creating a solid retirement plan, you can take steps towards achieving your retirement savings goals.
Its never too early to begin saving for retirement. Starting early can give you more time to take advantage of compound interest and let your investments grow. If you haven’t started yet, it’s never too late to begin. Every little bit counts, and you can take steps to catch up on retirement savings by contributing more to your retirement accounts.
A general rule of thumb is to save at least 10-15% of your paychecks for retirement. However, this may not be sufficient (or even too aggressive) for everyone, depending on your age and goals. You should also factor in inflation, investment returns, and life expectancy to determine your ideal retirement savings goal.
As you approach retirement, you may want to explore different types of retirement accounts and determine which ones are best suited for your needs. This could include a traditional IRA, Roth IRA, 401(k), each with their unique benefits and drawbacks.
It’s essential to choose retirement accounts that align with your long-term financial goals and are structured in a way that optimizes tax advantages and investment returns. Working with a financial advisor experienced in investment portfolios can provide the right guidance and expertise needed to make informed decisions that will support your retirement goals.
Retirement planning requires careful consideration of how to maximize your Social Security benefits. For individuals who are approaching retirement or have already retired, it is essential to have a thorough understanding of how Social Security benefits work and how to make the most of them.
Additionally, it’s crucial to be aware of the age at which individuals are eligible to receive full Social Security benefits, also known as the full retirement age. This age requirement varies depending on the individual’s birth year. The full retirement age is 66 if you were born from 1943 to 1954. The full retirement age increases gradually if you were born from 1955 to 1960 until it reaches 67.
Medical expenses can be a huge financial burden for retirees, especially if you require more medical care.
According to this Health Care Cost Estimate, an average retired couple age 65 in 2022 may need approximately $315,000 saved (after tax) to cover health care expenses in retirement.
Fortunately, there are several options available to help retirees cover these expenses. One option is to purchase a Medicare supplement insurance plan, which can cover many out-of-pocket costs that aren’t covered by traditional Medicare.
Another option is to use a health savings account (HSA) to save money tax-free for medical expenses. Retirees may also want to consider long-term care insurance, which can help cover the cost of nursing homes and other long-term care facilities.
Lastly and most importantly, you should work with a financial advisor to determine the best option or combination of options to fit your unique financial situation and medical needs.
For those who are retiring soon or already retired, making your retirement savings last throughout your retirement years is essential. This involves creating a solid retirement income plan and implementing strategies to help you manage your retirement funds.
This can include creating a withdrawal plan, managing your investments, and adjusting your spending habits to align with your retirement goals. Working with a seasoned financial advisor can help you create a plan that works for you and your unique retirement needs.
Retirement can be an exciting and fulfilling time, but it can also be a time of financial uncertainty. Is there a question here we didn’t answer?
Reach out the retirement income advisors at CKS Summit Group to help you navigate the complexities of retirement planning and answer all your retirement-related questions. We will provide the support you need to make informed financial decisions and achieve the retirement you’ve always dreamed of.