This retirement for dummies guide will come in very handy during the last 10 years of your career, which is critical in shaping your life after retirement. Your future is in your hands and that’s why you need to focus on crafting the best retirement plan and implementing your strategies.
It’s easier said than done since a lot of major life events happen when you’re at the last stretch of your career. Focus in saving for retirement and protecting what you have to enjoy retirement. With retirement just around the corner, here are important steps you need to do to have a more comfortable retirement.
Retirement for Dummies Guide that Actually Works
Make the most of catch-up contributions
You can use catch-up contributions in tax-deferred retirement plans once you turn 50. According to the current law, you can put an additional $6,000 in a 401k, on top of the maximum $18,500 allowed for people who are below 50.
Here’s what Howard Pressman, advisor at Egan, Berner & Weiger has to say about catch-up contributions:
With the kids out of the house, catch-up contributions come at “the point in life where people can finally dedicate themselves to saving.
Unfortunately, only a handful of people take advantage of this. These people are on the losing end because they only end up with a respectable amount of money compared to someone who maxed out catch-up contributions, who would have an extra $150,000 in the bank.
Have a Backup Career Plan
Time.com claims that on average, unemployed Americans 55 to 64 years old have been jobless for 11 months. This is alarming can derail your plans of having a comfortable retirement. To make sure that you can work until your desired retirement age, consider creating a backup plan – freelance work, short-term project or putting up a small business.
Here are other best jobs ideas for retirees and seniors according to Moneycrashers.com:
- Work for your former employer
- Work as a consultant
- Start a retail business
- Seek out low-stree, part-time work
- Work as a temp
- Find a part-time job with perks
- Give back
- Retrain for a career
Plan for Long Term Care
Discussing long term care with your family is recommended before retiring. According to the recent research by the U. S Department of Health & Human Services, around 52% of Americans turning 675 today will develop a disability that will require long-term services and supports (LTSS).
The cost of long term care services continues to increase each year. As seen in the table below, the average cost of a semi-private room in a nursing home is $85,775 annually while a private room in a nursing home costs $97,455 annually. Opting to pay for this out of the pocket will most likely put you in the losing end – wiping out your retirement funds or worse, you’ll become a financial burden to your loved ones.
Using ALTCP’s long term care planning tool can help you prepare for your future long term care needs. Also, help you understand the ins and outs of long term care insurance before you make a purchase.
Secure your family’s future by planning for long-term care now. Get free quotes from top companies and complimentary long-term care e-book.
Decide Where You Want to Live During Retirement
Housing is the takes a big chunk out of your retirement savings based on the chart below. According to the Center for Retirement Research, you can save $3,250 a year in taxes and upkeep if you swap a $250,000 house for a $150,000. This goes to show that downsizing is a great option if you want to save money during retirement.
There are myriad of factors that would make you decided where to spend your retirement like cost of living, climate and care costs. Based on Wallethub’s list of best states to retire, Florida ranks as the best state to retire in while Colorado is the second best state to retire in.
Test your Retirement Savings
Before jumping to retirement, try to test your retirement savings and live on the budget you’ve set for your retirement. It’s a way to check if you have enough funds that can match your preferred lifestyle.
If you think your savings are still not enough then make the necessary adjustment on their budget or delay your retirement. Without doing this test, you could find yourself facing financial woes a few years after retiring.
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