What does retirement security mean to you?
October is National Retirement Security Month. But what does retirement security mean to you? And how can you work toward achieving it?
Here are some suggestions:
- Build your resources. While you’re working, save in tax-advantaged accounts such as your IRA and 401(k) or similar employer-sponsored retirement plan. In your 401(k), contribute at least enough to earn your employer’s match, if one is offered, and increase your contributions whenever your salary goes up. Remember, especially early in your career, time is often your biggest asset. Be sure to save early, since the longer you wait, the more you’ll need to save to help reach your goals.
- Look for ways to boost retirement income. When transitioning to retirement, you can take steps to align your income with your needs. For example, consider Social Security. You can start collecting it as early as 62, but your monthly payments will be much larger if you can wait until your “full” retirement age, typically between 66 and 67. (Payments will “max out” at age 70.) So, if you have sufficient income from a pension or your 401(k) and other retirement accounts, and you and your spouse are in good health with a family history of longevity, you may consider delaying taking Social Security. You also might want to explore other income-producing vehicles, such as certain annuities that are designed to provide a lifetime income stream.
- Prepare for unexpected costs. During your retirement, you can anticipate some costs, such as housing and transportation, but other expenses are more irregular and can’t always be predicted, such as those connected with health care. Even with Medicare, you could easily spend a few thousand dollars a year on medical expenses, so you may want to budget for these costs as part of your emergency savings, and possibly purchase supplemental insurance. You may also want to consider the possibility of needing some type of long-term care, which is not typically covered by Medicare and can be quite expensive. The average annual cost of a private room in a nursing home is more than $100,000, and it’s about $55,000 per year for a home health aide, according to Genworth, an insurance company. To address these costs, you may want to consider some form of protection, such as long-term care insurance or life insurance with a long-term care component.
- Do your estate planning. It’s hard to feel totally secure in retirement if you’re unsure of what might happen if you have an unexpected health event, become incapacitated or die earlier than expected. That’s why you’ll want to create a comprehensive estate plan – one that might include documents such as a durable power of attorney, a will and a living trust. A review of your insurance coverages and beneficiaries can also help protect your assets and ensure they are distributed the way you want. In creating your plan, you will need to work with your financial advisor and a legal professional, and possibly your tax advisor as well.
Thinking holistically about your retirement security and developing and executing a strategy aligned with your goals may help free you to enjoy one of the most rewarding times of your life.
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.
Edward Jones, Member SIPC
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PSA: What does retirement security mean to you?
TBA: Oct. 4, 2021
October is National Retirement Security Month. If you’re still working, what can you do to help yourself achieve security during your retirement years?
For starters, contribute regularly to your tax-advantaged accounts, such as your IRA and 401(k). And put in enough to your 401(k) to earn your employer’s match if one is offered.
Also, look for ways to potentially boost your retirement income. If appropriate, you could delay taking Social Security to maximize your monthly payments. You also might consider investment vehicles that can provide you with lifetime income.
Here’s another tip: Budget for health care costs, which could reach several thousand dollars a year during your retirement. You might also want to consider obtaining some type of insurance to protect yourself against the costs of long-term care.
And to really feel secure during retirement, make sure your estate plans include measures to help protect your finances if something unexpected were to happen to you. Review these plans with your legal and financial professionals, and possibly your tax advisor, too.
Taking these and other steps may free yourself to help you enjoy what may be one of the most rewarding times of your life.
This content was provided by Edward Jones for use by (FA's NAME), your Edward Jones financial advisor at (Branch address or phone #).
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