It’s a goal that most workers dream about their entire adult lives. Retirement. The day you finally get to stop building your schedule and priorities around your work obligations and start living life on your terms. If you’re in your late 50s or in your 60s, you may be wondering when will be the right time for you to hang it up and head into retirement. How do you know if you’re truly ready? What if you retire too early and find you don’t have the financial security you need? What if you wait too long and miss out on the best years of your retirement? It may be difficult to know the exact, perfect time to retire. There are a few tasks you might want to complete before you leave the working world. Below are three big items to check off your list. If you haven’t addressed these items, now may be the time to do so. Create a retirement budget. There may be no more important or useful financial tool in retirement than your budget. A budget helps you see where you’re spending your money and whether your spending exceeds your income. Without a budget, it’s difficult to know whether you’re on the right track financially. If you haven’t developed a retirement budget, now is the time to do so. Also, you may want to try taking your budget for a test drive. Try living on your retirement budget for a few months. If you’re comfortable, then your budget may be accurate. However, if you find that you can’t live on your budget, you may need to do some more saving or adjust your retirement expectations. Project your income. It can be stressful to think about life with no paycheck. For decades, you’ve been able to rely upon the fact that your next check would come in the following week or month. After you retire, though, that consistent income will stop. Take some time to estimate all of your possible income sources in retirement. Social Security will almost certainly play a role. The only question is when you file for benefits. Generally, the longer you wait to file, the greater your benefit will be. You may also be fortunate enough to have a pension. Your company’s human resources department or pension benefit manager can help you estimate your payment. Finally, you will also likely need to withdraw funds from your savings and investments in retirement. Estimate a conservative withdrawal rate that helps you meet your needs but also gives your investments an opportunity to grow. Add up all those income sources to get a full estimate of your retirement income. Does it exceed your planned expenses? If so, you may be in good shape. If not, you may need to save more money or delay your retirement to increase your potential income. Plan for health care. Think Medicare will cover all your health care costs in retirement? Think again. Medicare is a very helpful tool for retirees, and, depending on your coverage choices, it will cover a wide range of costs. However, Fidelity estimates that the average 65-year-old couple will still pay $280,000 in retirement on out-of-pocket medical expenses.1 That figure doesn’t include long-term care costs, which could be thousands of dollars per month and may be required for years, depending on your ailment. The U.S. Department of Health and Human Services estimates that the average 65-year-old has a 70 percent chance of needing long-term care.2 How will you face these expenses? A well-funded health savings account (HSA) could help you cover the out-of-pocket costs. Long-term care insurance might be an effective way to pay for extended care and assistance. If you have a plan to pay for these costs, retirement could be a good idea. If not, you may have more planning to do. Not sure if you’re ready to retire? Contact us at Carstens Financial Group. We’re happy to consult with you, analyze your needs and objectives, and help you determine when is the right time for you to retire. Let’s connect soon. 1https://www.fidelity.com/about-fidelity/employer-services/a-couple-retiring-in-2018-would-need-estimated-280000 2http://longtermcare.gov/the-basics/who-needs-care/ Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency. 18154 - 2018/10/17
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