Your Retirement Readiness Checklist: How to Ensure You’re Prepared
Getting ready to retire?
As cited by most Americans, 67 is the ideal retirement age to go on an adventure or relax and enjoy your accomplishments. Unfortunately, most people don’t have enough savings that match their retirement goals.
In reality, two-thirds of Americans in their 40’s have less than $100,000 in retirement savings. While 28% of adults in their 60’s have less than $50,000. Meanwhile, 66% of millennials admitted that they’re not on track when it comes to retirement readiness.
Are you also having doubts? We’ve got you covered! Here’s a quick checklist to help you assess whether you’re prepared for a comfy retirement.
What is Retirement Readiness, and Why Is It Important?
Retirement readiness refers to the degree to which you’re prepared for retirement. Simply put, this means having enough assets to finance your life after you retire.
One benefit of retirement readiness is it reduces stress and anxiety. If you have a well-established retirement plan, you won’t have to worry about where to get money from. Instead, you can be carefree and execute your retirement goals.
It also allows you to lessen the financial burden that your loved ones are carrying. If you’re able to plan your retirement income carefully, you won’t need to ask for their help. If you have a hefty sum stored, you can help them with their expenses instead.
Checklist to Ensure That You’re Well Prepared for Retirement
The key element to retirement readiness is retirement planning. This refers to the process by which you set a definite retirement goal and plan how you’ll achieve them.
The process involves choosing prospective savings and investments vehicles. This can be via annuities, employer-offered plans like 401(k), or stock ownership plans. Some may also include setting up insurance policies and emergency funds.
This leaves the question, how will you know whether you’re on track? Read on to find out key indicators of retirement readiness.
Do You Know Your Estimated Retirement Cost?
Before anything else, understand how much money you need for a comfortable retirement. Such will help you in financial planning as you’ll have a definite goal in mind. In addition, it makes it easy to come up with strategies to finance your retirement goal.
To come up with a realistic budget, take a look at your expenses throughout the years. Start by calculating your average monthly fixed expenses, then factor in your estimated fund for your retirement goals.
For instance, you’re planning on an overseas trip. Research on how much the trip will cost and remember to make room for unexpected expenses.
Also, don’t forget to factor in possible taxes. This is especially true for those that meet the income threshold income. In addition, taxes will apply to some of their social security income.
The good news is that retirees can qualify for a lower marginal income tax rate. However, the amount you can save on tax varies per state; thus, we recommend talking to financial experts. Minich Financial, for instance, offers efficient tax planning services to those looking to cut off any unnecessary taxes.
Furthermore, most retirees experience high living expenses during the early years of retirement. However, living expenses can spike up in the later years due to medical bills and inflation.
While Social Security incomes are well-adjusted for possible inflation, your other sources of income may be vulnerable to rising consumer rates. This is why it’s important to account for inflation as your estimate for your future living expenses.
What are Your Sources of Income After Retirement?
After establishing a financial goal, it’s time to consider your sources of income. Social security income may cover for the rest of your life after retirement, but it doesn’t promise a huge sum.
Often, it’s not enough to rely on your social security income. Thus, most retirees explore investment vehicles such as annuities.
Annuities are contracts agreed upon between you and an insurance company. You’ll have to pay for a certain initial amount to the insurance company. In return, the company will make a series of payments to you in the future.
A fixed index annuity is a great saving plan that you can look forward to. Fixed index annuities offer you a steady stream of income after retirement.
What’s more, fixed index annuities are tax-deferred. This means that you’ll only pay for taxes when you make a withdrawal.
Do you Have Medical Insurance?
Universal health insurance in the United States only covers seniors above 65 years old. This means that younger citizens likely experience a lack of health insurance benefits. In addition, 23% of seniors in the country stated that they skipped recommended tests or treatments and doctor consultations due to high medical costs.
To avoid this dilemma, invest in life-long medical insurance. This helps assure that you won’t be pulling funds from your retirement money when you get sick.
Have You Paid Off All Your Debts?
As you know, debts will weigh down on you and prevent you from achieving your retirement goals. As such, you must assess your current financial condition. First, determine and list down all your outstanding debts.
Make a concrete plan to pay off your debt as early as possible to give you more time to save for retirement. Create a budget and make sure that you stick with it. Never compromise your current savings, as you’ll want to use that for retirement expenses.
Do You Have a Trustworthy Partner?
Planning and getting ready for your retirement is a complex task for one person. Fortunately, some trustworthy financial advisers can help lessen the burden.
They do so by helping you with hidden expenses and costs that will likely deter your estimation. They’ll also provide you with realistic and proven savings plans and methods that you can use. So, partner with a reliable financial adviser to help you get ready for retirement.
Partner With Minich Financial Today!
It takes more than having a social security income to achieve retirement readiness. Your future relies on efficient and effective retirement planning. For this process, it’s important to remember that it takes two to tango.
Make your dream retirement come true with the help of Minich Financial! Beyond having the resources to get you where you want, Dan Minich has both the skills and experience that you’re looking for.
As a committed financial adviser, Dan Minich uses creativity to bring every dime of your money the extra mile. So what are you waiting for? Get in touch with us and start preparing for a comfortable retirement today!