If looking ahead to retirement makes you a little nervous, you’re not alone.
Nearly half of Americans who haven’t reached retirement predict that they won’t be financially comfortable once they get there, according to a Gallup survey.
For some, those potentially uncomfortable retirement years are decades away. But for Baby Boomers, retirement either already arrived or will in the next decade or so, prompting many Boomers to wonder whether they are prepared for their looming date with destiny.
And that raises a question: Just what does it take to be prepared?
“Many Baby Boomers measure their preparedness in terms of assets,” says Ryan Eaglin, founder and chief advisor of America’s Annuity.
“They’re trying to hit a certain number or account balance. Asset accumulation is an important part of retirement planning, but it’s not the only component. There are a few other steps you need to take to make sure you’re ready to leave work behind and enjoy a stable and comfortable retirement.”
Eaglin suggests three planning steps that can help Baby Boomers — or anyone else — be better prepared for retirement:
- Prepare not just one, but two budgets. Most Americans don’t use a budget, even though it’s a handy tool — especially in retirement. “It helps you see where you’re spending your money, how much money you can afford to spend and what adjustment you should make,” Eaglin says. He recommends creating two budgets. One would be for your remaining years before retirement so you can look for ways to cut spending and save more. The other would be for after you retire. “Think of ways to live the retirement you’ve dreamed of while also staying within you income,” Eaglin says. “It may be difficult but just the act of preparing a budget can help you get a better understanding of your financial situation.”
- Project your income. While your budget will help you understand how you are spending your money, you also need to have a good grip on what your potential retirement income will be. For most people, that’s a combination of Social Security, personal savings and possibly employer pensions. Social Security has an income estimator tool on its website, and an employer should be able to provide a pension-benefit projection. “Your financial professional should be able to help you project how much you should be able to take from your savings each year,” Eaglin says. Once you compare your projected income to your spending budget, he says, you’ll know whether you need to save more or rethink retirement spending. You also might want to look for ways to increase your guaranteed income, such as through an annuity, he says.
- Plan for long-term care. As much as people don’t want to hear this, the average 65-year-old has a 70% chance of needing long-term care in retirement, according to the US Department of Health and Human Services. “That means it’s very possible you or your spouse may need care either in your home or in a facility at some point,” Eaglin says. “That care can be expensive. Unfortunately, it’s usually not covered by Medicare, and it’s covered by Medicaid only after you’ve depleted much of your assets.”
“If all this tells you that you’re behind on where you want to be with preparation and your savings, the good news is it’s never too late to get started,” Eaglin says. “You may have to adjust your plans, but with focus and discipline, you can still put yourself in a position to have a comfortable and enjoyable retirement.”
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About the Author: Ryan Eaglin has 14 years’ experience in the retirement and lifestyle planning field. A life insurance, annuity and estate-planning professional, he has earned his name at the top of the list of the top 1% of advisors nationally. Eaglin has been a featured retirement planner on FOX, FOX Business, ABC, CBS, CNBC, NBC and AZCentral.
Photo Credit: stock photo
“… its very possible you or your spouse may need care either in your home or in a facility at some point, Eaglin says. That care can be expensive. Unfortunately, its usually not covered by Medicare, and its covered by Medicaid only after youve depleted much of your assets.
There are legitimate ways to avoid depletion. e.g.:
http://www.tn-elderlaw.com/resources/asset-protection-faq
Yes, there are. Thanks for the resource, Dave.
I feel like preparing for longterm care isn’t something people think about too often but it is necessary. It takes such a huge weight off of your loved ones
The government is broke,as you hav said and Medicaid may not be there whenever you need it.
Hence preparation is key
Are social securities a good alternative option to annuity insurance plans?