Off-Ramp to Retirement
Retirement on your mind? Whether you are on the brink of retiring or already there, you want to make sure you saved and protected your assets to ensure you’ll have income to exceed your retirement dreams. 65 years of hard work should not go to waste which is why it is crucial you make sure you are planning for retirement that may be 30 years or longer!
Check out these 5 keys to managing your retirement goals so you can reach your dream!
- Inflation Preparedness
It’s not if, it’s when. Inflation is a product of our ever-growing economy and with it comes negative effects. The cost of living when you retire will be drastically higher compared to when you first joined the work force. The increase in costs of goods and services sold will influence your income purchasing power. In fact, with just a 2% inflation rate, $50,000 today would be worth over $82,000 twenty-five years from now!
Takeaway: Certain pensions and annuities as well as Social Security can help damper the effects of inflation on your income through market-related performance and cost-of-living adjustments. Beyond these, there are several investment options that keep in sync with rising inflation.
- Keep savings in savings
Research from Fidelity states that you should withdraw no more than 4%-5% from savings in the first year of retirement to be confident it will last 20-30 years. Therefore it is so crucial to have a retirement income plan in place so you know how much you can afford to withdraw without sacrificing retirement quality of life.
Takeaway: Develop a retirement income plan so you can take the necessary steps to live your retirement dreams.
- Be proactive not reactive for healthcare costs
Healthcare costs are on the rise and so is the average age in America. Just like any expense, Long-term care rise with inflation and is important to keep in mind when thinking about your retirement. In a recent study conducted by Fidelity, a 65-year-old-couple who retired in 2017 will need about $275,000 to cover solely health care costs during retirement. This does not include Long Term care and according to another study conducted by the US Department of Health, 70% of those 65 and older will need some type of LTC service. A Genworth 2017 study concluded the average cost of assisted living ranges from $45,000-$85,000 annually.
Takeaway: Don’t let healthcare costs that could have been avoided be the pitfall to your retirement. Consider long-term care insurance so you are able to live your dream without any setbacks.
- Plan to live longer
Technology has come a long ways which has increased the average age Americans live to. Medical advances along with healthier lifestyles has the average American living well into their 80s. This means you should be planning for a 30 year or longer retirement. If you don’t plan right, you could live past your savings and rely on just Social Security, which for the average retired worker is $1,369 a month.
Takeaway: Although Annuities can be daunting and confusing, they are one of the best choices for guaranteed income for as long as you or your spouse lives.
- Invest for growth
When saving for your future, consider creating an investment strategy that has a mix of both conservative and aggressive assets. Having too much of one compared to the other can have detrimental effects on your return due to growth limitations and erosive effects on inflation. Overall, you should have an asset mix in place that focuses on your risk tolerance, financial situation, and investment horizon.
Takeaway: Build a diversified portfolio make up of stocks, bonds, and short-term investments. Your portfolio should be based on market volatility, length of investments, and your financial situation. Make sure you are set up for a dream retirement by not putting all your eggs in one basket.
Statistical Content derived from Fidelity.com
This information is provided as general information and is not intended to be specific financial guidance. Before you make any decisions regarding your personal financial situation, you should consult a financial or tax professional to discuss your individual circumstances and objectives.
Provided by: Adult Financial Education
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