Retirement Age: Six Things You Should Start Thinking About
retirement (Photo credit: 401(K) 2013)
Most workers spend a majority of their life saving and planning for retirement. As retirement age finally begins to near, it can be an exciting and nerve-wracking time. There is so much to plan for and get ready for. Here are six things you should consider when you begin to think about retiring.
1. Work a Bit Longer
If you can’t live comfortably off the earning off your investments and the Social Security you are entitled to, then you may want to hold off an extra year or two. This provides you additional time to save, and just as importantly, a year or two less that you’ll be living off of your savings. Even moving from full time to part time could help ease the transition and leave you in a more comfortable position when you retire fully.
2. Downsize Your Home
One of the best things you can do to reduce expenses when you retire is move into a less expensive home. Faber & Company Inc recommends you look at what you can get out of your house. Foreclosing on a mortgage that hasn’t been paid off would be a disaster if you have retired and cannot afford to put your finances back in order. Your house is one of your most valuable assets, so downsizing will help you increase liquidity, consolidate your debt loans in Edmonton, and downsize living expenses.
3. Delay Social Security
You are eligible to start receiving Social Security benefits when you turn 62, but you don’t have to claim them right away. If you wait until you turn 70 to start claiming them, your Social Security benefits can increase by over 60%. Your Social Security benefits are your greatest asset during retirement, and you will boost its value further but waiting if you can do so comfortably.
4. Ensure You Are Vested
You never lose the money you personally contribute to your retirement accounts, but if you haven’t been vested in the company retirement plan you might not be able to keeper your employer’s matches. This is especially true if you haven’t been with that particular company for a long time. Speak with your employer’s human resource department and find out the date when you will be fully vested. It will be worth working a few extra years if it means keeping all the matched savings.
5. Enroll in Medicare Immediately
Unlike Social Security, which pays you to delay enrollment, Medicare penalizes you for enrolling later than necessary. You are eligible to sign-up for Medicare the first three months before your 65th birthday until the three months after. If you fail to enroll during this time period, your premiums increase 10% for each additional year that you were eligible but failed to enroll. For Medicare Part B, you are given an 8-month period before you begin to pay a late penalty. You should always enroll in these plans immediately, unless there is a very strong reason not to do so.
6. Balance Investments
When you are years away from retirement, you can take an aggressive approach to your portfolio and try to maximize the investment income you earn. As you grow closer to retirement, however, you want to reduce risk since downswing will be devastating to close to retirement. Take action immediately to protect your investments rather than aggressively grow them, and you will leave yourself a much stronger safety net.
Retirement is an extremely exciting time in anybody’s life, but it is important to make sure you are as prepared as possible. Make sure to carefully follow these tips, budget your expenses carefully, and you will be able to retire comfortably and enjoy some well-deserved relaxation!
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Category: Financial Planning
