It’s never too early to prepare for your retirement. Whether you’re a fresh university graduate still out looking for work or you’re a few years away from the retirement age, you need to have a solid plan to support you when you get there.
7 Questions You Need to Ask Yourself When You Start Planning for Your Retirement
At what age should I retire?
So far, the retirement age in the U.S. has not changed. It’s still 66 years old. However, you can opt for early retirement but take note you can only fully enjoy your Social Security benefits if you retire at 66. You may retire at age 62 but your Social Security benefits will be reduced.
If you’re considering early retirement, like at age 55, you need to have certain safeguards in place such as resources you can tap into.
Where will I get the money I will need to live on when I’m retired?
First, you need to determine what your typical retirement expenses will be. On average, a 65-year-old individual looking to retire today needs about $43,317 a year to live comfortably. If you have other expenses that need to be covered, such as counseling or other incidental expenses that you might incur along the way.
Given the amount that you need to live a comfortable life, as early as now you have to set aside savings for retirement and add other income sources, such as investments, to support yourself.
What are some of the things I want to do?
One of the reasons a lot of people look forward to retiring is having the time to do things that they want, things they never could do because of the demands of work. Make a list of activities and things you want to do when you retire and start planning accordingly for them.
Am I qualified for certain government entitlements?
On top of Social Security, find out if there are certain benefits or assistance that the government gives for retirees.
When will I have access to my company pension plan?
You may access your company pension plan as early as age 55 even if you’re still working. However, keep in mind that the longer your money is saved, the more it can grow. This means two things: first, the earlier you start, the better off you’ll be; and second, the longer you delay withdrawing your money, the bigger the amount will get.
If you’re thinking of getting it as early as 55-years-old, take note that you can potentially run out of money for your retirement and you will end up with a larger tax bill.
How can I make my retirement debt-free?
Debt is another major consideration when planning for retirement. Ideally, you should retire with no debts and other outstanding financial obligations to anyone or any company. The only way you can retire debt-free is if you start settling your debts now.
What other pressing matters do I need to address?
Other things that you need to consider when planning for retirement are:
- Insurance – Check if you have the right type of policy and if it is enough for your retirement.
- Investments – Investments are a big part of any retirement planning. When you stop working, you will turn to your investments to help boost your retirement income.
- Estate planning – Have you prepared your estate plans? How will your assets be divided among those in your will? How will you be cared for when you are no longer capable of making decisions?
The clock is ticking. Time flies by really fast. If you keep putting off preparing for your retirement, you might wake up one day and find yourself in a jam. Remember, if you fail to plan, you plan to fail.
