Retirement is indeed a major life change that requires a simultaneous change in your income and lifestyle. With the reports of the large number of retirees who are still paying off their student loan debt and holiday debt incurred years back, it is rather doubtful whether or not they can gleefully lead their life with the savings that they have. According to a research, it has been seen that half of the soon-to-retire are even concerned about their receding savings account and the steps that they need to take in order to carry on with a standard of living.
How much money does a family need in order to maintain the same standard of living even after retirement? Well, you have to save a considerable amount of money while you’re working in order to maintain the same standard of living that you are used to. But how many retirees have saved this amount of money? Very few indeed! What are the tips that the people who are about to retire in 2015 should follow? What changes do they need to make in their finances? Below is a list of tips that you can take into account.
1. Decide When You Should Sign Up for Social Security
When you’re signing up for Social Security dramatically affects how much amount you will receive each month. Most baby boomers are eligible to receive full benefits at the age of 66. If you sign up for Social Security benefits before the age of 66, your monthly payments are soon reduced and in case you delay your payments till the age of 70, your payments will automatically increase. You want to consider the penalty for taking it early and the benefit of delaying it beyond the actual retirement age. Members of married couples can also claim spousal and survivor’s payments and strategize ways to maximize their benefits as a couple.
Warming the bones by Pedro Ribeiro Simões,on Flickr. This work is licensed under a Creative Commons Attribution 2.0 Generic License.
2. Make Sure You Sign Up for Medicare on Time
As soon as you’re eligible to do so, it’s important to sign up for Medicare. You need to start submitting your paperwork for Medicare up to three months before the age of 65. Remember that this is not something that you can wait to delay on as there are always some financial penalties if you sign up later. Take a close look at Medicare’s premiums, deductibles, co-pays and co-insurance so that you may get an idea of how much you’ll need to pay out of pocket.
3. Calculate Your Workplace Retirement Benefits
Try to get an appointment with your human resources department in order to determine which workplace retirement benefits can be carried over into retirement. There are some fortunate employees who get traditional pension payments and retiree health insurance after they leave their jobs. Therefore, you should also check when you vest in your 401(k) retirement plan and get to retain your employer’s contributions.
4. Consider Rolling Over Your 401(k)
When you leave your job, you will always have the option to roll over you 401(k) balance over to an IRA or Individual Retirement Account. If you wish to decide whether or not this is a good move, you have to compare the fees and investment options in the 401(k) plan with those in an IRA. If you can roll it over to an IRA, you get a lot of benefits. A lot of times when you consolidate, you can take benefits of price breaks and lower fees. If you take penalty-free 401(k) withdrawals from the 401(k) associated with the job you left at age 55, but in case you move the money to an IRA, you may have to wait until 59 ½ to avoid a 10% withdrawal penalty fee.
5. Develop an Emergency Fund
If you’re someone to retire in 2015, have you made a plan for addressing your emergencies? Covering your basic monthly costs in retirement isn’t enough for you. You will continue to need an emergency fund so that you can cover your unexpected bills. Keep 6 months to a year’s worth of expenses in a liquid-interest-bearing account from which you can get money whenever you want. Having some cash out all times also gives you flexibility and confidence. If the investments are not going in the right direction, you can even leave them along while you get back to the right track.
6. Decide How to Spend Your Time
What did you decide to do in retirement? This will have a big impact on your quality of life and on your cost of living. Certainly you will spend less on gas as you might not have to spend a lot of time on work clothes. But there are some people who might wish to spend more as they’re simply sitting around their house. Keep a check on how you’re spending your time.
Therefore, spending your retired life is entirely in your control. Debt can mar your lives and although debt consolidation loans and companies are there to help you get out of debt, you should always be on the safer side.
