When preparing for retirement, it is not as simple as knowing you have Social Security along with a pension from your employer. You need to consider many factors before you put “retired” down as your employment status.
Is Your Home Paid for? Do You Have any Credit Card Debt?
When preparing for retirement, make plans for living arrangements when retiring. A home or an apartment is one of the largest expenses you face when retiring. If your home is paid-in-full, you have a great start. Many people don’t consider what their $900 per month mortgage will do to their retirement. Others fail to think about their $600 per month apartment payment and the large chunk of retirement money it eats up. Also, it is important to have most, and hopefully all of your credit cards paid. It is okay to have one credit card on hand to use in an emergency.
Will Your Social Security Really Offer You Enough Income?
Many people decide they want out of the workforce and choose to retire as early as possible. Those people retiring at age 62 lose a lot of their potential income, versus waiting until they turn 65. Okay, so you might not live that long. But what if you live longer, say a LOT longer? You could end up losing several hundred dollars per month in Social Security benefits. When your pension and savings run out, that money will be sorely needed.
It is Important to Prepare for Long-Term Care
Fortunately, you might be perfectly healthy the first day of your retirement. However, we never know when we might be struck by a car; or, we could suffer a stroke that causes long-term effects; or, we could be diagnosed with an early stage of Alzheimer’s. There are many unforeseen costs should we be forced to enter a nursing home. In 2012, the average cost, for a private room, was $81,030 a year, probably double your current salary. This expense can easily lead to bankruptcy as well as losing your home, and all of the other consequences such a situation presents.
Not Planning Early Enough Resulting in No Savings
Many people unrealistically face retirement without any type of savings. They make no provision for this day they so looked forward to – and here it is. If you do not have a savings account of any kind, you might find it necessary to find a part-time job, live with a family member, or make other arrangements in order to live from day to day. Many of the baby-boomers are now learning a hard lesson – they spent too much money during their careers, and saved too little. Planning your future, at a young age, will provide the money you need during your retirement years. It is important to plan early and to plan wisely.
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