Saving for retirement is critical, but what does this look like, exactly? How do you make sure you’re on the right track? How does Medicare fit into the equation? These are all relevant questions, and Bobby Brock Insurance is here to provide guidance.
When planning for retirement, think about taking these four steps:
1) Create a Retirement Bucket List
No matter your age, it’s not too early to make a retirement wish list. How you want to live will determine the amount of money you’ll need to fund this lifestyle.
Consider the following:
- When you’ll retire: The longer you work, the more you can save for retirement through your employer 401(k) plan and IRAs.
- Where you’ll live: If you choose to move elsewhere, consider your living expenses, including food, housing, taxes, and transportation.
- How you’ll spend your days: Are you an avid traveler? If you plan to play more golf, dine out frequently, or travel extensively, you’ll need more savings.
2) Find Out Your Sources of Retirement Income
Next, how much you have coming in will determine how much you’ll be able to spend annually. Most people will have many sources of retirement income, depending on their work history.
- Social Security. You can begin taking Social Security at age 62. However, your monthly benefits will be much less than if you wait to take them until your “full retirement age” — which is 67 for people born after 1960. If you can delay until you hit 70, you’ll receive the highest monthly benefits.
- Retirement plans and IRAs. You can start making withdrawals (free of penalty) from 401(ks), pension plans, and traditional IRAs at age 59 and ½. But withdrawals are regarded as taxable income, so the more you extract, the higher your tax bill may be. You’ll want to invest these assets for as long as possible, and try not to take out more than annual required minimum distributions when you turn 72.
- Other sources of income. Do you receive additional income from taxable investment and bank accounts? What about rental income? Some people work a part-time job to generate extra income.
3) Enroll in Medicare
As you age, you’re likely to acquire a large percentage of healthcare costs (at some point). It’s always wise to prepare for the unexpected. When you turn 65, you should enroll in Medicare as your main health insurance provider.
If you delay enrollment or simply miss the deadline, you will pay hefty late-enrollment fees, some of which may persist until you pass away.
Also, don’t neglect long-term care, especially if you have a family history of dementia or chronic illness. Nursing home expenses can exceed $100,000 per year. Assisted living facilities can be just as expensive.
4) Save More and Invest
If you don’t think your savings will be enough to support the retirement you want, take charge while you have time. Consider these tips:
- Raise your pre-tax contributions to your 401(k) plan as much as you can. You’ll reduce your taxable income and if your company offers matching contributions, you’ll gain even more.
- Contribute annually to your IRA.
- If you’re 10+ years away from retirement, allot 60% of your retirement assets to stocks. In the long run, stock funds tend to deliver better returns than bonds.
Contact Bobby Brock Insurance
Whether you need help with Medicare enrollment or you’d like to compare your options, contact Bobby Brock Insurance today. We have licensed agents in all 50 states. Give us a call at (662) 844-3300!