At What Age Do You Want to Retire?
Now that you are in your 50s, it is time to start thinking about the exact age you want to retire. If you are married, you and your spouse may choose to retire at different ages, or within different years. However, the age at which you retire drastically affects your monthly income.
How Much Guaranteed Income Do You Have?
When speaking in terms of your retirement portfolio, not all of your investments will result in guaranteed income. For example, the money you have in your savings account and your monthly Social Security check are guaranteed. However, things such as stocks, real estate earnings, and even your 401(k) are susceptible to significant fluctuation.
How Much Will Delaying Social Security Increase Your Monthly Income?
Balancing the age you retire, with your monthly Social Security earnings is essential. Depending on the age you started working, and your annual salary, delaying your Social Security by even one year can increase your monthly check by up to 8 percent. While it may be your goal to retire in your early 60s, it may be more financially responsible to wait until your mid to late 60s.
How Much Will Your Retirement Finances Be Taxed?
One thing that is easy to forget when speaking in terms of retirement income, is how much tax you will pay on your retirement investments. While the lump sum in your savings account is something you have already paid taxes on, the lump sum in your 401(k) is taxable within the calendar year you withdraw. Sit down with your financial advisor to ensure that you fully understand your upcoming taxes.
Is Your Current Retirement Plan Realistic?
Even if you and your spouse have been putting money away in your savings and 401(k) each and every month for the last few decades, it may not be enough to provide you with the same quality of life you currently enjoy. This is why it is important to take a close look at what your monthly expenses will be including inflation and fluctuating expenses such as repairs and maintenance of your home.
Where Are Your Areas of Opportunity?
Even if you feel as if you are essentially on track, it is important to meet with your financial advisor to identify any areas of opportunity. Some of your areas of opportunity could be significant such as putting a few hundred in your 401(k) or savings each month, while others could be minimal such as investing in mutual bonds. Now is also an excellent time to complete your estate planning.
Will Downsizing Be Necessary?
Another one of the retirement questions you need to start answering in your 50s is whether downsizing your home will be necessary. Downsizing can help to decrease your monthly expenses, as well as provide you with less to maintain and keep track of. If you own a business or second home it is also essential to put a plan in place for selling them, or passing them on to family members.
Should You Purchase Long-Term Care Insurance?
Another thing to keep in mind as you near retirement is whether it is beneficial to invest in long-term care insurance. Even if you have private insurance and Medicare, they are both limiting when it comes to medical conditions and health concerns in which you or your spouse may require round-the-clock personal care. However, long-term care insurance can fill that gap.