7 Signs You’re Prepared for Retirement

1. You Can Visualize It

You may be “retirement age”, but are you emotionally ready to retire? What are you going to do? Will you work or volunteer part-time? Will you spend all day participating in your favorite hobbies or travel the world? Many seniors “retire” for three to six months only to decide that they were really just taking a sabbatical and return to work.

If you can’t visualize what you will do during retirement, you may not yet be prepared to retire. We strongly recommend talking to a friend who is currently in retirement to ask her how the transition was, what she struggled with and how she coped. You might pick up some tips for how to make the transition as smooth as possible.

2. You’ve Worked Out Your Budget

Budgeting in retirement is fairly simple. You know how much you will get each month from Social Security benefits and when that money will come in. Ideally, you have enough Social Security income coming in to cover your necessary expenses, like property insurance, health insurance, car insurance, property taxes, fuel and food. If all your needs are taken care of, it’s a lot easier to ride out a bear market in the early years of your retirement.

3. Plug Any Leaks

It’s not uncommon for seniors to take out a HELOC or second mortgage on their home to make significant home improvements. Depending on the terms of the loan and alternatives to financing maintenance and repairs, this can be a very smart financial decision. When planning to retire, keep in mind that there’s nothing inherently wrong with having a mortgage in the early years of your retirement.

What you really need to watch out for, though, is high-interest debt. It may look in a bull market like your portfolio can sustain you for the next 30 to 40 years. But we strongly recommend that you pay off all costly debt before you think about taking the leap into retirement. If you are the co-signer of your grandchildren’s credit card, student loan debt or motorcycle loan, let them know you are planning to retire. If you have co-signed for a physical asset, have it re-financed to have your name removed. If you are responsible for someone’s revolving debt, pay it off and have yourself removed from the account.

4. Have a Contingency Plan

According to research recently published by the Transamerica Center for Retirement Studies, only a third of current retirees retired when they had initially planned. Over half of them retired sooner than planned due to health difficulties or unexpected job loss. It’s essential that you have a contingency plan in place.

Maybe you’re planning to retire in three years, but a year from now your employer goes through a restructuring and you lose your job. Will you file for unemployment insurance and work part-time until you can find a job that pays you the same salary or wage as the one you just lost? Can you afford to file for Social Security prematurely? Remember, if you file for Social Security benefits at 62, you essentially forfeit 6.67% of your benefits annually for the first three years and then 5% annually for the next two years.

5. You’re Confident You Can Afford Healthcare

The true cost of healthcare in America comes as a real shock to new retirees. In fact, the Employee Benefit Research Institute published a study in April 2019 revealing that fewer than 33% of Americans have attempted to determine how much healthcare will cost them during retirement. Unfortunately, between premiums, deductibles and co-pays, the average senior couple can expect to spend $285,000 during retirement. If you haven’t accounted for healthcare and long-term care, there’s a very good chance that you can’t really afford to retire.

Remember that you should be planning for the unexpected in retirement. You may not budget for long-term care in the form of an in-home nurse or nursing care facility because your daughter said she would become your home health assistant. But by the time you need her, she may be across the country and unable to provide you with care. Research how much home health aides make in your state, consider how many hours you or your spouse may need assistance and work than into your budget.

How to Prepare for Healthcare

A very good general rule of thumb is to withdraw only 4% from your retirement accounts annually. If you expect to need $18,000 a year for healthcare, you will need to retire with 25 times that earmarked for healthcare, or $450,000. The only exception to this is if you have an HSA or another flexible vehicle of liquid capital dedicated to healthcare. For example, if you have a total of $36,000 in your HSA upon retirement, you would only need $414,000 in investments earmarked for healthcare.

6. You Have the Mental Fortitude to Make Smart Stock Market Decisions

Stock market jitters affect the best of us. If you have a set retirement date in mind and the stock market fluctuates drastically during the few months leading up to the date, we recommend retiring on your targeted date. To do this comfortably, you may want a flexible spending plan to account for any market downturns.

For example, withdraw only 3% of your portfolio rather than 4%. There will be plenty of time to travel or achieve your other retirement goals when the market corrects itself. Maybe you take a part-time job until the market recovers. Whatever your plan is, it’s essential that you don’t withdraw your entire portfolio. Time in the market always beats time out of the market, even during the Great Depression. Moreover, it is terrible from a cash flow perspective to lose out on quarterly dividends if those aren’t automatically reinvested and the tax hit you will take on the short- or long-term gains you earned.

7. Your Loved Ones Are Protected

Before you retire, it is important to ensure that your life insurance needs are still being met. We strongly recommend you talk to a fee-only, licensed financial advisor to review your needs and make sure they are still being covered adequately by your life insurance policy. If you don’t already have a life insurance policy, now is the time to get one in place.

Learn More About Living Comfortably In Retirement Today

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What to Ask Before Buying Life Insurance for Seniors

1. How Much Does Life Insurance Cost?

How much your life insurance will cost depends on several factors. Among these factors are your perceived risk, what type of life insurance you need, how much insurance you need, and if your policy has a cash value in addition to the death benefits paid out.

2. What Type of Life Insurance Is Right for Me?

If you previously had life insurance through your previous employer, you probably know not all life insurance is the same. Researching the best life insurance for seniors is easier when you know which type of life insurance is right for you and your family. Permanent life insurance is typically right for seniors because it provides long-term financial protection.

Permanent life insurance includes a death benefit, but some policies also include cash savings. If your policy includes cash savings, your premiums may be higher. However, many seniors find this benefit is worth more than the marginal increase in cost.

3. How Much Life Insurance Do I Need?

Only you can know how much life insurance you need to provide for your family after your death. Here are some questions that will help you determine the answer:

• How much do I contribute to my family’s income?
• How would my surviving family get by?
• Who depends on me financially?
• Do I have enough savings to cover any final expenses and repay my debts?
• How will my grandchildren finish college?
• How much will my estate have to pay in taxes after my death?
• Will my savings be adequate after accounting for inflation?
• Would I like to leave money to any surviving family or organizations?

Many insurance agents recommend five to eight times your current income in life insurance. However, some seniors have already paid for their gravesite or paid for their grandchildren’s college. Other seniors don’t have financial dependents. Your situation is unique to you. Don’t let life insurance agents pressure you into getting more life insurance than you need.

4. How Are Death Benefits Paid?

In most cases, death benefits are paid out in a lump sum. However, as the policyholder, you have the right to determine the payout structure upon your death. For example, you may have half of your life insurance paid out upon your death. This will allow your beneficiaries to cover your burial costs, debt, and estate taxes on your death benefits. You may have the other half released a year after your death to pay off a house, cover your grandchildren’s tuition, or however else you need to provide for your family financially.

If you have children who are not financially dependent on you, look into using your death benefit payout to open a non-qualified retirement account for your children. If you have a spouse who is dependent on you financially, research an installment plan for payout, so they still receive regular income. If you have one, talk to your financial planner about what would be best for your family after your death.

5. Will My Premiums Change or Increase Over Time?

Your premiums will change depending on if you choose term or permanent insurance. Your premiums for term life insurance will remain the same for the “term” of the loan. This may be 10, 15, or more years. However, if you are still alive and would like to renew your life insurance policy, your premiums may go up significantly for the next period.

Learn More About Life Insurance

To learn more about life insurance and other important news relevant to seniors like you, create an account with Senior Health & Lifestyle News today. We’ll send you great content directly to your inbox. You can also follow us on all your favorite social media platforms, including Facebook and Twitter.

If you’re ready to take the stress out of your living situation and transition into housing that offers you the level of support you need, Senior Health & Lifestyle News is here to help. Whether you or your loved one is looking for independent living with added services or specialized nursing care, there’s a senior housing option geared to your needs. Read on for the senior lifestyle news you need to know to find the perfect housing option.

7 Housing Options to Consider

Retirement Living Communities

This is an independent living community designed for seniors who can manage their own health care needs or have help from family. Offering an apartment-like setting and offering meal plans and social activities, it’s the perfect choice for a senior looking to maintain their independence in a more planned community.

Assisted Living Centers

Similar to retirement living communities in setting, assisted living centers offer more specialized health services for residents with care needs. These communities are open to residents with needs ranging from mostly independent to those needing regular assistance with daily living.

Home Health Care

For seniors who don’t want to leave the home they love, home health care is an option to ensure stability and proper care. Also called “Aging in place”, this allows the senior to live in familiar settings while caregivers, doctors, and therapists come to the house. Medicare provides this as a service.

Adult Care Homes

For those who don’t want to live in a larger facility but need specialized care, adult care homes are located in residential areas and house a small group of seniors alongside trained caregivers. This creates a homey, welcoming atmosphere without the shock of transitioning to an assisted living center or nursing home.

Modern Nursing Facilities

Nursing homes have come a long way from decades ago and are an ideal option for seniors with significant caregiving needs or chronic illness. Now called Skilled Nursing Facilities or Intermediate Care Facilities, they offer full-time care and on-site medical attention along with activities and dining options designed to encourage health and welfare.

Memory/Dementia Care

These facilities are designed for seniors with Alzheimer’s Disease or other memory impairments. They offer similar services to skilled nursing facilities but have on-site specialists who work with memory loss. More secure than most senior living options, they offer the structure needed to help memory patients function.

Continuing Care Retirement Communities

A recent holistic addition to senior living options, these communities offer a continuous transition of care as seniors age and need more assistance. Offering a guarantee of care until the end of life, they include independent living options that can transition to assisted living, and have skilled nursing and medical care options on site. These facilities are the most expensive options, but they offer the security of no further transitions during the aging process.

Senior Lifestyle News to Help You Find the Perfect Senior Housing Option

No matter your lifestyle or the level of care you need, there’s a senior housing option right for you. Follow Senior Health & Lifestyle News for all the senior lifestyle news you need to find the perfect senior living option, or contact us with questions today.

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