Planning For Retirement

Are You Ready to Retire?

Many of us look forward to it for decades — retirement! Work can be pleasant or even fun, but it’s exciting to think of when we can stop working and enter our golden years, perhaps even achieving an early retirement, if we made smart personal finance decisions and met our retirement goals.

Anything Can Happen

For many Americans, retirement may look different in 2022 than it has in years past. The severe economic impact of the Covid-19 pandemic could push many people to consider retiring early, with less saved than they may need.

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Manage Healthcare Costs

As they’re easy to overlook and failing to plan for them can lead to disaster in retirement. Also — they tend to be steep. One estimate, from Fidelity, is that a 65-year-old couple retiring this year can expect to spend, on average, a total of $285,000 out of pocket on healthcare during retirement, and that doesn’t even include Medicare or long-term care costs.

Prepare for Inflation

It’s important to factor inflation into your retirement planning. After all, if your retirement is 20 years away and you aim to save $1 million for it, that $1 million won’t have the same purchasing power in 20 years as it does today. Over long periods, inflation has averaged about 3% annually, though in some years it can be much higher or lower. That kind of rate can shrink the buying power of your dollar roughly in half over 25 years.

Practice Retirement Spending

A common guideline you’ll hear is that retirees should be prepared to replace 80% of their income in retirement. Rules of thumb can be useful, but this one is fairly random. It’s better to develop a plan around real spending needs.

Setup Social Security

It’s vital to know how much income you can expect from Social Security, as for most people, it will make up a big chunk of your retirement income. For context, know that the average monthly Social Security retirement benefit check was recently $1,478, or about $17,700 per year. Clearly, that’s not going to be sufficient for most people, and that’s why you need to start planning, saving, and investing as early as possible.

Contact Ellen To Prepare For Your Retirement Today

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