10 steps to take before retirement
Many dream of retirement, imagine themselves lying on the beach with a cocktail in their hands. If you want to ensure a comfortable life after retirement, then you need to think about it now and start saving money.
Cheat Sheet has published a list of questions that you should think about in advance in order to save money for a comfortable old age:
- Estimate future retirement expenses
To correctly distribute money, you need to understand where you spend money every month. So think about what expenses you will have after retirement, for example, a mortgage loan, utilities, transportation, products.
- What income you will receive
After you have determined the main items of future expenses, you need to estimate the amount of your income. Do not forget to take into account social security, inflation and retirement savings. Sites like Bankrate and Vanguard help you evaluate the cost / income ratio.
As soon as you calculate your future expenses, you also need to know what your expected income will be. Remember to include social security, inflation, and estimated retirement savings. You can use the income worksheet or calculator to better understand what your retirement income will be. Download tools from sites like Bankrate and Vanguardto help you get started.
- Calculate the cost of medical care
The average cost of after-service health care for an 65-year-old couple, according to Fidelitu, in 2016, the year was $ 260 000. This is 6% higher than a year earlier. Many when planning to forget to take into account the cost of medical care, and this is quite high spending.
- Long-term care allowance
Think, perhaps, in expenses it is worth laying insurance for long-term care allowance. According to FidelityThe 65-year-old couple spends about $ 130 000 to pay for the care of all their years of life after retirement.
5. When can I use my retirement account?
At the age of 59,5, you can start shooting days with an IRA or 401 (k), without paying 10% penalty. Remember that you still have to pay income tax on the amount that you withdraw. However, if you have a Roth IRA or Roth 401 (k), you can withdraw money without tax.
- Average retirement age
The average retirement age, according to LIMRA Secure Retirement Instituteis 63 of the year. But, according to a recent study by the US Social Security Administration, roughly the 1 of 4 of today's 20-year-olds may be disabled before they reach retirement age. When planning for old age, keep in mind that you can retire before retirement age.
- Save money in case of emergency
When planning expenses, do not forget about emergency cases. Force majeure can not be planned, so create a financial pillow that can support you. The more you can save, the better.
- Plan your vacation spending
After retirement you will have a lot of free time. Think now how you would like to spend your free time and how much you will need to spend. For example, you will want to play golf or go on a world tour. Start saving for future entertainment now.
- Pay your taxes
The tax agent will not leave you alone even after you retire. For example, when cashing IRA or 401 (k) accounts, you will have to pay tax. Do not forget to reflect these expenses when planning expenses.
- Life insurance costs
The theme of death is unpleasant, but inevitable. Many would like, after their death, close people are not left without care. Life insurance is a good way to help loved ones. In the event of your short death, your loved ones will receive insurance payments that will be able to support their lives over the next few years. Calculate the required contributions can help life insurance calculator from Life Happens.
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