Retirement can be an exciting time for many people. However, it can also be full of questions, especially when it comes to finances. Unfortunately, it’s not always easy to find answers to these commonly asked retirement questions because everyone’s needs and goals vary. There are a couple of things to keep in mind that can make things easier:
- Take a look at your current budget and determine which expenses may increase or decrease
- Medicare begins at age 65 but will only cover about 50% of your healthcare needs, therefore make a plan to have supplemental insurance.
If you are planning to retire soon, you might want to consider relocating. This may allow you to save money in the long run- and give you time to do the things you enjoy. Solivita Living is a real estate agency located in Kissimmee, Florida specializing in 55+ communities. We have 8 properties to choose from featuring a variety of amenities and attractions.
In this article, we’ll take a look at some of the most commonly asked retirement questions.
7 Questions
Below, we will address 7 of the most commonly asked retirement questions.
How much do I need to retire?
Despite what many of the simple online calculators might indicate, this depends on several factors. Some people work at the same job their entire working lives and spend very little, so they retire with income from a retirement account or a fairly decent monthly pension. They can live a comfortable lifestyle with that income.
On the other hand, other people spend a lot and don’t have a retirement or pension account. They will need to either change their spending habits or have a large savings account to support their spending.
Evaluate your current spending and determine what will change. If you want to be sure that your savings, Social Security, and retirement accounts can support your plans, budget on the conservative side.
How much will I spend?
Some retirees find that they spend more after retirement due to traveling and engaging in hobbies. Others find that they spend less because they’re not eating out as much, paying for dry cleaning, or commuting.
You can create your retirement budget by examining your current budget to determine which areas may increase or decrease. If your employer doesn’t offer a healthcare plan for retirees, you’ll want to factor in those premiums, especially if you retire before you are eligible for Medicare.
How long will my money last?
This is one of the most commonly asked retirement questions and one of the hardest ones to answer because there are several factors involved:
- How long you are going to live
- How much you will be spending
- Your ROI on savings/investments
- Your medical expenses
- Your tax rate
However, instead of settling on a specific number, consider several scenarios that will help you see what you need if you were to spend more or if your returns are lower. This will give you a range, which is much better than setting your sights on a specific number.
When should I start taking Social Security?
This is one of the most important decisions that every American must make. If you start taking your benefits early, you get less monthly income. If you delay benefits, you get more monthly income.
Many people believe this is an easy decision and opt to take their benefits early. While this seems like a good idea in the short-term, it could cost thousands, or hundreds of thousands, in missed benefits.
Instead of considering this an independent decision, look at how it fits in with the rest of your retirement plan. Consider variables such as:
- Inflation
- Longevity
- Need for guaranteed income
- Current financial assets
- Personal tax situation
- Whether you plan to work part-time in your retirement
- Spouse’s/ex-spouse’s income
Should I purchase an annuity?
An annuity is a financial product that insures your income. If you have guaranteed income sources such as Social Security or a pension that covers most of your expenses, you may not need to insure additional income. On the other hand, if you do not have a guaranteed income, you may want to purchase an annuity that will ensure that you have a minimum future income.
There are advantages and disadvantages of annuities, so this decision should be made as part of the big picture of your retirement plans.
How will I cover medical expenses in retirement?
Starting at age 65, you will have access to Medicare health coverage. However, it only covers about 50% of your total healthcare expenses. Medical expenses vary by location, but most people spend approximately $5,000 to $10,000. Therefore, it is estimated that the average couple will need $295,000 to cover their healthcare expenses in retirement.
Should I take my pension as a lump sum?
Many pension plans offer two options:
- Lump sum
- Annuity
Many people take the lump sum without considering the repercussions. When you look at the big picture, the annuity option may be better.
Ready to Retire?
If you are getting ready to retire- or you’ve already retired- you may have questions about your income. However, careful consideration of your decision can help you answer these questions and more.
One possible way to save money in retirement is to relocate. Solivita Living is a real estate agency based in Kissimmee, Florida specializing in 55+ communities. We have 8 properties to choose from with an array of amenities and attractions to keep you busy. Book your in-person or virtual tour today.