Retirement Strategy: How Much Should I Save?
Investing with Pacific Northwest Advisory can help you feel more confident about your retirement planning. Rather than worrying about whether you'll outlive your retirement money, the team of experts can work with you to develop a comprehensive plan that takes into account all your financial goals and considerations. With a proactive approach to retirement planning, you can focus on enjoying your retirement years and all the opportunities they bring. Let us help you make the most of your retirement with our investment solutions and expert guidance.
You may see retirement as an extension of the present rather than the future.
This is only natural, as we all live in the present, but the future will arrive. The costs you have to shoulder later in retirement may exceed those at the start of retirement. As you may be retired for 20 or 30 years, it is wise to take a long-term view of things.
You may have a health insurance gap.
If you retire before age 65, what do you do about health coverage? You may shoulder 100% of the cost.
Suppose you become disabled or seriously ill, and working is out of the question. How will you make ends meet?
Age may catch up to you sooner rather than later.
You may stay fit, active, and mentally sharp for decades to come, but if you become mentally or physically infirm, you need to find people you can trust to manage your finances.
You could be alone one day.
As anyone who has ever lived alone realizes, a single person does not simply live on 50% of a couple's income. Keeping up a house or even a condo can be tough when you are elderly. Driving can also be a concern. If your spouse or partner is absent, will someone be available to help you in the future?
These are some of the blind spots that can surprise us in retirement.
They may quickly affect our money and quality of life. If you age with an awareness of them, you will be able to manage the outcome better.
Your workplace retirement account can play a critical role in your overall retirement strategy. However, some people have gone further with such accounts than others, especially recently.
Much has been written about the classic financial mistakes that plague start-ups, family businesses, corporations, and charities. Aside from these blunders, some classic financial missteps plague retirees.
Calling them "mistakes" may be a bit harsh, as not all of them represent errors in judgment. However, whether they result from ignorance or fate, we need to be aware of them as we prepare for and enter retirement.
Timing Social Security.
As Social Security benefits rise about 8% for every year you delay receiving them, waiting a few years to apply for benefits can position you for higher retirement income. Filing for your monthly benefits before you reach Social Security's Full Retirement Age (FRA) can mean comparatively smaller monthly payments.
Managing medical bills.
It's important to keep in mind that Medicare coverage is not all-encompassing. While the program provides valuable healthcare benefits, there are certain services and treatments that may not be covered, such as dental and vision care. As it stands, you may be responsible for paying some out-of-pocket costs for these types of services. However, by exploring additional insurance options or savings plans, you can better prepare for these expenses and ensure that your healthcare needs are met. Don't let unexpected costs catch you off guard – take proactive steps to protect your health and financial well-being.
Actuaries at the Social Security Administration project that around a third of today's 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not unreasonable, yet there is still a lingering cultural assumption that our retirements might duplicate the relatively brief ones of our parents.
You may have heard of the "4% rule," a guideline stating that you should take out only about 4% of your retirement savings annually. Some retirees try to abide by it, but others withdraw 7% or 8% per year. Why is this? In the first phase of retirement, people tend to live it up. More free time naturally promotes new ventures and adventures and an inclination to live a bit more lavishly.
Talking About Taxes.
It can be a good idea to have both taxable and tax-advantaged accounts in retirement. Assuming your retirement will be long, you may want to assign this or that investment to its "preferred domain," which means the taxable or tax-advantaged account that is most appropriate for it as you pursue a better after-tax return for your entire portfolio.
Retiring with debts.
Maintaining or growing your wealth can become more challenging when you're required to allocate portions of it to creditors. Whether you're dealing with high-interest debts or unexpected expenses, these financial obligations can hinder your ability to preserve or accumulate wealth. However, by developing a strategic plan and seeking professional guidance, you can take control of your finances and work towards a debt-free future. With the right tools and resources, you can effectively manage your debts while still making progress towards your long-term financial goals.
Putting college costs before retirement costs.
There is no "financial aid" program for retirement. There are no "retirement loans." Your children have their whole financial lives ahead of them.
Retiring with no investment strategy.
Expect that retirement will have a few surprises; the absence of a strategy can leave you without guidance when those surprises happen.
These are some of the classic retirement mistakes. To help you avoid them, take some time to review and refine your retirement strategy with the help of a trusted financial professional.
This content is developed from sources believed to be providing accurate information. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Douglas Greenberg President of Pacific Northwest Advisory