Preparing is key
Financial needs change through all stages of our lives. The one constant focus as we age should be on saving for retirement years. As you begin your retirement plan, there are a number of things to consider.
Saving for retirement
Retirement has many logistical aspects, and one of those is saving. USA.gov provides things to consider as you plan your retirement savings. Starting early and saving on a consistent basis should help you move toward the savings amount you need. The amount to save for retirement will depend on your needs and specific situation. The United States Department of Labor has ideas and tips in their Top 10 Ways to Prepare for Retirement.
Retirement income needs
Income typically decreases for people when they retire. It is essential for you to know what your expected retirement income will be, and compare it to the expenses and debt you think you will have in retirement. Consider what kinds of loans you need to pay, such as auto or credit cards. Make a plan to pay off any debts you do not wish to carry into retirement. FDIC Consumer News Take a New Look at Your Money Habits has ideas on paying down debt. Take into account healthcare and long-term care costs you may have, which tend to be higher for older individuals. Consumer Financial Protection Bureau (CFPB) Consumer Advisory: 7 ways to keep medical debt in check has information on managing healthcare bills.
Your Retirement Savings and Deposit Insurance
FDIC deposit insurance protects bank customers in the event that an FDIC-insured depository institution fails. Bank customers don’t need to purchase deposit insurance; it is automatic for any deposit account opened at an FDIC-insured bank. Deposits are insured up to at least $250,000 per depositor, per FDIC-insured bank, per ownership category. To determine if your retirement account or retirement plan account qualifies for FDIC deposit insurance coverage, visit Your Insured Deposits.
Social Security benefits
What you earn during your working years will determine how much you receive in monthly Social Security income when you retire, or if you become disabled and are unable to work. The Social Security Administration’s web pages offer information for every age. They have pages for when you are ready to apply for retirement benefits, as well as pages for young people.
Housing in retirement
Staying in your current home after retirement may be attractive. You will want to consider if that is the best plan for you, and what fits your needs as you age. Here are a few things to consider:
- Home maintenance, repairs, taxes, and other costs over time;
- Proximity to trusted family or friends when you might need their assistance;
- Location of your home in relation to places you want, or need, to go to such as medical appointments, the grocery store, or public transportation; and
- Whether your home has stairs, for example, since physical ability may diminish as one ages.
Secure Documents
Keep your important financial documents in a safe location, where they can be accessed during an emergency. You may want to provide copies or share how to access these documents with someone you trust. Consider creating a limited power of attorney to appoint a trusted family member or associate who could access your checking account to pay your bills on your behalf, if you are unable to do so.
Here are suggestions on what documents to keep:
- Bank and brokerage account information. List your bank, brokerage account, and safe deposit box information. Make sure this information is secure to prevent unauthorized access.
- Mortgage and loan information. Create a list of all your financial obligations and loans, how much the payments are and when they are due.
- Insurance Policies. Having insurance policy information handy will help if an insured event occurs.
- Retirement, Pension, and Social Security information. Having your income sources listed could help manage that information.
- Contact list of doctors and any financial professionals you use. This can help manage both your health and financial affairs.
Retirement planning can be a complex task. Planning ahead, being informed and prepared can ease the task when you are ready for the next chapter of your life.
Reprinted with permission from FDIC Consumer News, January 2022.
https://www.fdic.gov/resources/consumers/consumer-news/2022-01.html
