The Barnett Group’s partner and director of financial services Chirag Chauhan was featured in the Memphis Daily News. He offered tips to ensure you’re financially ready before entering retirement. Check it out here or read below.
It’s the beginning of a new year and the thought of retirement is becoming more realistic to you. The idea of working a 9 to 5 may not give you the same thrill as when you were a spring chicken entering the workforce. If you’d rather have more time to hit the golf course, lie on the beach or pursue other passions, maybe it’s time to consider your retirement goals. Before you submit your notice to your employer, make sure you’ve got your eggs (and your nest egg) in a row and ask yourself these questions about your financial security.
What is my stable retirement income?
Take a look at your Social Security benefits and your pension fund. These numbers make up your base income during retirement. If you can afford to postpone collecting Social Security until you reach full retirement age, it may make sense to wait. You will only receive a portion of your allotted benefits if you start collecting as early as age 62. You can determine your full retirement age on the Social Security Administration’s website. Review your social security statement periodically to ensure that there are no errors.
How much should I have in my savings?
There’s no exact number you should have stashed away because everyone’s situation will be different. Look at your current income and your spending habits. Many expenses such as commuting costs to work every day or clothes to wear to work will be no longer applicable to your budget. However, you still need to take expenses such as utility bills and food into account. Typically, your budget during retirement should equal at least 70 to 80 percent of what you’re currently spending. Then, take a comprehensive look at your financial situation and calculate your budget to see if your stable retirement income and your investments can accommodate your projected daily budget. Do not forget to take into account consumer inflation, unexpected medical costs and investment volatility.
How will I get rid of my debt?
If you have excessive debt, you’re probably not ready to retire. While you’re still working, pay off as much debt as you can. Start with the accounts with higher interest rates such as credit cards and car loans, then focus on your home mortgage. Tapping into your retirement accounts to pay off debt can result in paying higher taxes.
What will I do for health care coverage?
If you’re 65 or older, you will qualify for Medicare. If you plan to retire before 65, make sure you apply the monthly cost of individual coverage to your budget. Medicare holders may also want to consider a supplemental insurance policy to cover various health care services and treatment. Plenty of affordable options are available to retirees. Additionally, do not forget to include a drug plan that will cover prescription medications.
What if I don’t have enough money to retire?
If your calculations are lower than what you expected, this doesn’t mean you have to work the rest of your life. Keep adding as much as you can to your retirement plans now. Consider the optimum time to collect your Social Security benefits. You should also rethink your current and future spending budgets. Maybe it’s time to sell the spare car you don’t use every day or hold off on that cruise to the Western Mediterranean. You can also get a part-time job during retirement. Not only will it help you ease the transition into retirement, you’ll also have some extra pocket change so you’re not living by the dollar every day.
If you don’t have one already, speak to a competent financial planner who can help re-evaluate your investments and asset allocation. He or she can counsel you on the proper steps to develop a budget, prepare an optimized asset allocation, address the risks to your plan, review tax and legal ramifications, and provide assistance in keeping your plan current.
If you’re unsure about your retirement preparedness, contact Chirag today at 901-365-3447 or firstname.lastname@example.org.