Scared of retirement? Not confident about your retirement planning? Haven’t saved enough? Worried about the how much help your life insurance would be?
All of us plan to live a certain kind of life after we retire from our hectic jobs but to live that desired lifestyle we need to have a strong financial portfolio. While we all know that we need to save a substantial amount of money for a worry-free retirement we never know how much we will need after we give up working.
So here are 7 ways you can cover the gap while there is still time:
Wait till you Turn 65
The U.S. Census Bureau of Labor Statistics indicates that the average retirement age is 62 but still a lot of people retire at 65 or even later and are still unable to save enough. Waiting till 65 gives you extra work years which means extra savings. The later you start collecting your social security benefits, the larger is the amount of benefit you will receive. Your social security benefits increase by about 5.5% to 8% per year if you are willing to wait a little longer.
Don’t Wait to Downsize
Do not wait to let go of pompous assets like your big home or luxurious cars or collection of antique pots. Consider selling them and investing the profits. Due to lack of time, you might want to invest in the stock market and pull off the risk, but you might not notice that you also might not have the time to cover up the loss. Instead, invest conservatively so that you have the money stocked when you are in need.
Move to a No Tax state
You can move to states like Florida, Nevada, New Hampshire, Pennsylvania, Washington and Wyoming, where there is no income tax levied on pension, social security, or dividend income. The benefits can definitely include a beachside lifestyle.
Accept Government sponsored Medical insurance
The Government sponsored medical life insurance provides adequate coverage for doctor’s visits, emergency care, assisted living, respite or in-home care. What these insurances do not cover is prescription medication, drugs, dental and vision care because these are primary defaults during old age. To cover these you would need an add-on coverage offered by Medicare Advantage and Supplemental Insurance (Medigap). Consult your insurance provider to find better ways to live a healthy life after retirement. You can also consult the AARP about governmental provisions and senior plans.
Max Out Retirement Accounts
You should start funding your retirement accounts well in advance or catch up in good time. Keep adding to your 401ks, 403b, 457s, social security benefits, pensions, and annuities. 97% of all 401k plans have a catch-up provision. According to the Plan Sponsor Council of America, only 36% of plans allowing catch-up will give you a match for your catch up. They are the most tax advantageous, which means that you should keep funding these generously in the remaining years of your retirement.
Diversify using Bonds and ETFs
If you have ten years or more to your retirement, you should make more volatile investments like stocks. They are risky investments but very fruitful. As you’re inching closer to your retirement, you wouldn’t want your portfolio to be full of risky, aggressive investments. Be more diversified by investing safely in bonds or exchange traded funds i.e. ETFs.
AARP is a go-to institution for the senior population. It is a popular senior citizen advocacy group and gives out financial services, insurance plans, social welfare schemes, and legal counsel for the elderly. The annual membership fee is $16, which is further discounted if you buy the years in bulk. They give out discounts to members on dining, travel, roadside assistance, auto insurance, health benefits, and more. This is a golden institution to sign up for.
There are several solutions in the market for problems like these but when it comes to retirement, you should never give up on the old school method of safety. And remember, it better late than never.