Financial Focus: What does retirement security mean to you?
October is National Retirement Security Month. But what does retirement security mean to you? And how can you work to achieve it?
Here are some suggestions:
Build your resources
While you are working, save in tax-advantaged accounts such as your IRA and 401 (k) or similar employer-sponsored retirement plan. In your 401 (k), contribute at least enough to win your employer’s match, if there is one, and increase your contributions every time your salary increases. Remember, especially early in your career, time is often your greatest asset. Make sure you save early, because the longer you wait, the more you’ll need to save to reach your goals.
Find ways to increase your retirement income
As you transition into retirement, there are steps you can take to align your income with your needs. For example, consider social security. You can start collecting it as early as 62, but your monthly payments will be much larger if you can wait until âfullâ retirement age, generally between 66 and 67 years. (Payments will “cap” at age 70). If you have sufficient income from a pension or your 401 (k) and other retirement accounts, and you and your spouse are in good health and have a family history of longevity, you may consider delay enrollment in social security. You may also want to explore other income producing vehicles, such as certain annuities designed to provide a lifelong income stream.
Prepare for unforeseen costs
During your retirement, you can anticipate some costs, such as accommodation and transportation, but other expenses are more irregular and not always predictable, such as those related to health care. Even with Medicare, you could easily spend a few thousand dollars a year on medical bills, so you might want to budget for these costs as part of your emergency savings and possibly purchase supplemental insurance. You may also want to consider the possibility of needing some type of long term care, which is not usually covered by Medicare and can be quite expensive. The average annual cost of a private room in a nursing home is over $ 100,000, and it’s about $ 55,000 per year for a home aide, according to Genworth, an insurance company. To meet these costs, you may want to consider some form of protection, such as long-term care insurance or life insurance with a long-term care component.
Do your estate planning
It’s hard to feel completely secure in retirement if you’re not sure what might happen if you have an unexpected health problem, become incapacitated, or die sooner than you expect. That’s why you’ll want to create a comprehensive estate plan, which might include documents like an enduring power of attorney, a will, and a living trust. A review of your insurance coverages and your beneficiaries can also help you protect your assets and make sure they are distributed the way you want. To create your plan, you will need to work with your financial advisor and a legal professional, and possibly your tax advisor as well.
Thinking holistically about your retirement security and developing and executing a strategy aligned with your goals can help you enjoy one of the most rewarding times of your life.
This article was written for Edward Jones’ financial advisers. Edward Jones and his associates and financial advisers do not provide tax or legal advice. Chuck Smallwood, Bret Hooper, Tina DeWitt, Kevin Brubeck, Charlie Wick and Jeremy Lepore are financial advisors at Edward Jones Investments and can be reached at Edwards at 970-926-1728, at Eagle at 970-328-0361, 970-328 – 0639 or 970-328-4959 and in Avon at 970-688-5420.