One of the main reasons why seniors are involved in retirement planning is to understand when and if they can retire. Just by thinking retirement alone, it can already result to anxiety which is associated with overwhelming feelings and unpreparedness.
Basically, one big problem about retirement is how to bring balance in seniors’ lives and engage themselves in the next stage after retiring.
There are common, preventable mistakes which hinder people from experiencing ‘on time’ retirement. However, with proper planning, you may steer clear the potential mistakes which could mess up your plan for retirement.
1. Trying to live too big.
The initial question about retirement planning is, “How much income do I need in order to keep my existing lifestyle during the retirement period?” Not really surprising, because majority of the seniors’ answer is, “I don’t know,” or they have done the wrong assumption. If their assumption is very high, the retirement goal may be unachievable and the whole planning process becomes frustrating. On the contrary, if their assumption is very low, which is always the case, the retiree can have a poor financial condition in life and will do some adjustments.
The standard rule is for you to know that approximately 80% of your latest yearly income is important for your retirement. You may disagree to believe and refuse to follow this generality, but lots of seniors really want to know how much is needed for their retirement.
Always bear in mind that in entertainment, travel and eating out, seniors tend to spend more on these things. They feel they still have good health and enough time to engage themselves on different activities. Later in life, the cost of their healthcare is expected to increase.
To figure out the most precise retirement number, what you need is handy information. Reliable information can arise from the SS payment, anticipated earnings from the pension and some from the retirement savings. While there is a need to assume things, the result will be a gainful estimate about how big a retiree can save.
2. Disregarding the bigger cost of healthcare.
One thing most commonly overlooked by retirees is the assessment of the healthcare cost included in the retirement planning. Afterwards, they include it in the calculation of their income needs. It is presumed that married couples aged 65 years old who retired in 2012 will get an average cost of healthcare amounting to $240,000 in retirement alone. And if the big potential outlay is overlooked, seniors may feel strapped with their cash later in their weakest years.
Time after time, people have the presumption that Medicare covers the retirement planning expenses; however, there’s no truth on this. The cost of Medicare for the retirees continues to increase every year, so it’s vital to really know what is expected in the future. Learn more things about Medicare costs and your options of coverage.
3. Having no long-term care plan.
A person who loves and cares for his retiring parent understands the expenses that can take their parents, including their bank savings. Both money and time necessary for the provision of excellent care can be staggering.
Based on the survey of the Dept. of Health in US, around 70% of retirees more than 65 years old are in need of healthcare. From DC Metro area, the percentage for the average annual rate is $109,600 for the private room inside a nursing house. It can cost $20 dollars per hour for the home healthcare services.
The interactive guidelines on state-by-state advice, helps in calculating the long-term cost of healthcare in the future. Granted that the claim of 50% can last for over 1 year (when the projected medical costs become faster than the inflation), then these costs can increase quickly.
It’s very important for the retirees to know about the long-term healthcare alternatives and how future expenses can be paid as needed.
4. No sufficient savings from then & now.
Begin saving early for your retirement. The earlier you start to act, the bigger the chance for your goal to be accomplished. Why? Simply because the compound interest works with its magic.
This is how math plays its role: To save $1,000,000 when you reach 67 years old, a 25-year-old person must save $345 each month within twenty years to be able to save the huge amount.
The goal of savings can be unreachable both for the older and the younger people. Therefore, the secret is prioritizing your savings for the retirement planning and afterwards begin saving a certain amount every month.
5. Failing to update your retirement plan.
As the levels of expenses and income change, so do markets increase and go down. Therefore, it’s imperative that you check your retirement plan at least every 2 years so you can update it. If the last plan was created 5 years ago before the promotion of your spouse, before giving birth to your third child, or before moving to another place, it could be that your retirement policy goes with a lifestyle you no longer have.
If you’re 65 years old, unemployed and still looking for a job, you may want to give up your long struggle by embracing the early retirement option. Make sure then that you are aware of your retirement plan to be able to avoid common mistakes made by retirees.
To learn more about retirement planning and your insurance policies, please contact us at DMG Insurance and Financial Services, Inc. (http://www.dmginsurance.com) at 543 N state Road 7, STE 106, Royal Palm Beach EL, 33411, phone 561 422 7071, Fax 561 422 7072.