According to a recent Gallup study, retirement is America’s top financial worry. The study found that more than 50 percent of Americans are concerned that they won’t be able to fund their retirement.1
It’s easy to fall behind on your retirement planning. If you’re like many Americans, you have other financial challenges that may seem more pressing. Perhaps you’re struggling with debt. Maybe you’re paying for your child’s education. When you add up your normal expenses, it may be difficult to find additional funds to put toward retirement.
Fortunately, it’s never too late to correct course and get back on track. Below are a few warning signs that you aren’t as prepared as you should be. If any of these sound familiar, it may be time to develop a new strategy. A financial professional can also help you implement a retirement strategy.
You haven’t projected your retirement income.
One of the central goals of any retirement strategy is to generate enough retirement income to cover your expenses and lifestyle. You’ll need to create enough income to not only pay your bills but also keep up with inflation. Most retirees can count on some level of income from Social Security and even a pension. However, it’s likely that you’ll fund much of your retirement with distributions from your savings.
How much income can you expect each year in retirement? If you don’t know the answer, now may be the time to develop a projection. You can obtain an estimate of your Social Security benefit amount from the Social Security Administration. If you have a pension, your employer should be able to provide a projected payment amount.
It may be more difficult to project income from your savings. Your distribution amount may depend on your balance, your allocation and more. A financial professional can help you develop a savings and investment strategy and then estimate a reasonable withdrawal amount that you can take each year.
You don’t know how you will pay for health care.
Many retirees believe that Medicare will cover all their retirement expenses. While Medicare is a valuable resource, it doesn’t cover everything. In fact, there are many medical services that Medicare doesn’t cover at all.
You should plan on having some out-of-pocket medical expenses in retirement. You’ll likely have to pay premiums, copays, deductibles and more. Fidelity estimates that the average retired couple will spend $280,000 on out-of-pocket medical expenses.2
There are steps you can take to minimize the impact of these costs. For example, you could fund a health savings account (HSA). You also may want to consider a supplemental Medicare policy to address gaps in traditional coverage. A long-term care policy may also be a wise decision, as Medicare usually doesn’t cover in-home assistance or stays in assisted living facilities.
You provide financial support to your grown children or other relatives.
A recent study from Fidelity found that 47 percent of millennials receive some form of financial assistance from their parents. More than 20 percent still live with their parents.3 It’s common for many baby boomers to provide some level of assistance to their children.
It’s natural to want to help your child, especially if he or she is facing a difficult situation. However, that support could hurt your retirement. Every dollar you give to your child is a dollar you can’t save for the future.
You may want to have a frank conversation with your child about your retirement needs and goals. Explain your objectives and what it will take to reach them. Then develop a plan to help your child achieve financial independence.
Ready to eliminate the red flags in your retirement planning? Let’s talk about it. Contact us today at Thomas Financial. We can help you analyze your needs and implement a strategy. Let’s connect soon and start the conversation.
Licensed Insurance Professional. This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice. This information has been provided by a Licensed Insurance Professional and is not sponsored or endorsed by the Social Security Administration or any government agency.
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