Tuesday, August 21, 2012

3 Retirement Decisions You Need Now

RetirementRetirement (Photo credit: Tax Credits)There are more people that need financial advice right now than those with airtight plans. The problem is there are too many delegators and not enough do-it-yourself thinkers. How many of us question the moves we must make right now? For those who see future finances as a complex puzzle, by all means seek the opinion of a financial adviser. For all those do-it-yourselfers, start with these three simple questions; 

  1. How much do I need to live on each month? 
  2. During retirement, if I were to draw x amount from my retirement income, how long would it last? 
  3. Do I need a long term care insurance policy? 

Retirement Decision #1

Financial planners suggest pre-retirees save an aggressive 80 percent of pre-retirement income to maintain the current standard of living. Of course, this will vary depending on the lifestyle. During retirement you pay less in taxes, spend less on children and have less of a mortgage burden than you did while working. The way you decide to spend your retirement years will impact how much income you’ll need. Create a smart preplanned budget that details the expenses likely to decrease and the expenses likely to increase. The more detailed your spending habits are, the more accurate retirement picture you will have.

Retirement Decision #2

It’s great that we’re living longer; on the other hand, a longer life expectancy presents a dilemma in developing an airtight retirement plan. How much income will you receive annually during retirement? Take inventory of all retirement sources, including cost-of-living adjustments. For example, social security typically has a cost-of-living increase, yet your company pension probably will not adjust annually. If you own rental property, you will probably adjust the rental income for rent increases.

The biggest question is do you currently have enough money set aside to reach your retirement goals? If not, depending on your age, you will have to make a few sacrifices. Possible solutions include living on less, saving more, working longer past the normal retirement age or moving to a less expensive area to retire.

Retirement Decision #3

Many retirees have traditionally placed the burden of care on their families, yet this has left millions looking at nursing home care. Becoming a caregiver is difficult, and while it may start out as a loving burden, many retirees simply deserve better. Seniors have two basic options: accept the risk of depleting their savings and hope they do not require care or purchase insurance. Long term care insurance allows seniors to live out their remaining lives how they choose – in their own homes, in an assisted living community or upscale nursing home. Estimating what you can pay out-of-pocket is challenging, unless you can see the future. Nursing homes, assisted living and home health care typically cost approximately $100 – 150 per day. If you or your spouse ended up in a nursing facility, how would it impact your retirement income?

These three simple questions can profoundly impact your lifestyle. Sit for a while and rethink your retirement, and evaluate your options.

Author Byline:

Ken Myers as an Expert Advisor on multiple household help issues to many Organizations and groups, and is a mentor for other “Mom-preneurs” seeking guidance. He is a regular contributor of “http://www.gonannies.com/”. You can get in touch with him at k.meyerst20@gmail.com.

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