Our lives are jam-packed with so much, from the time we start a family to buying a home, building a successful career and sending our children off to college. More time is spent planning a vacation than planning a retirement, but all of a sudden, it’s around the corner. This article from The Washington Post, “It takes a lot of work to be ready to retire. Don’t forget these things,” takes a look at some of the common issues that financial planners encounter when working with people planning for retirement.
While there are some who don’t begin considering retirement until they reach their 50s, it’s not too late to get started on your retirement planning. However, a late start may mean facing some harsh realities.
Let’s look at those things some forget to plan or didn’t even realize they needed to plan. First, some people aren’t prepared emotionally to retire. You need to determine how you will spend your time and what it might cost.
Medicare. You must enroll in Medicare at 65, but if you delay until 66, you’ll have to take the initiative because it’s not automatic. If you’re late, there’s a 10% penalty for every 12 months you delay. If you wait 24 months, there’s a 20% permanent penalty because you forgot to re-enroll. Enrollment is three months before to three months after your 65th birthday. If you delay taking Social Security, you’ll have to enroll in Medicare on your own.
Healthcare Costs. Studies show that health care will cost about $250,000 for a couple in retirement, or about $5,000 per year per person. People frequently underestimate health-care costs in retirement—they forget prescription drug and long-term care costs—which can use up a lot of money. The same is true of dental expenses, and Medicare doesn’t cover dental.
Major Purchases or Repairs. Some fail to account for major purchases, such as home repair and upkeep. Many retirees are caught short on the occasional large purchase, so examine your budget annually to be sure you consider things that come up quarterly, semiannually or annually. Remember that life events like weddings, graduations or just spoiling the grandkids can be unanticipated costs.
Planning for a Long Life. This is very important! Ask yourself this: if you live to age 90, will your money last? There are many things to consider when thinking about 25 years in retirement, like long-term care. If you’re still young and healthy, you may want to consider investing in a long-term care insurance policy.
Your Estate Plan. If you haven’t yet created an estate plan, your assets will still be distributed. They just may not be distributed according to your wishes; the state will decide for you. A better solution: meet with an experienced estate planning attorney to create an estate plan that takes care of your family. It should address your current assets, family situation and the current laws. However, you should consider working with an estate planning attorney with an ongoing relationship with his or her clients, since these things change over time.
For more information about why Family Estate Planning Law Group works with all our clients on an ongoing basis, explore our website and contact us to schedule your consultation today!
Reference: The Washington Post (October 15, 2016) “It takes a lot of work to be ready to retire. Don’t forget these things.”