Prioritize savings for retirement…
Having worked for so many years and looked forward to retirement but realize it may take longer than anticipated? Statistics show that the number of Americans delaying retirement and putting in some extra years at work is on the increase. The Urban Institute in its 2013 report stated that 24.4% of adults who are 62 years and above partook in the workforce indicating a rise from 17.1% in the year 2000.
Their reasons include not having enough savings and constant household responsibilities. A lot of people keep working because they delight in what they do or have the chance to function in a new role. As your age group carry on with work in their later years, you may begin to wonder if you should postpone retirement as well since everybody seems to be doing so.
Below are 4 questions you must answer truthfully before deciding on whether to postpone retirement or not.
IS THERE A PALPABLE BENEFIT TO YOUR SAVINGS PLAN?
Let’s assume you have calculated your budget for retirement and you’re pretty sure of your ratio of replacement (i.e., the amount of income you need to sustain your present living standards when you retire). If your retirement savings plan is sufficient to cater for your daily expenditures and allows for some special activities then feel free to retire.
However, if you are still capable of working, it might be to your advantage to continue. As stated by the Urban Institute Retirement Policy Center, you can increase your yearly retirement revenue by as much as 9% if you work an extra few years. Even though you have attained the full retirement age, delaying retirement and not drawing your Social Security benefits also increases your monthly distribution.
DO YOU HAVE A SAFE HEALTH CARE COVERAGE?
Numerous Americans delay retirement for the reason that they wish to keep enjoying the health care coverage provided by their employer. Even if you have enough resources that will enable you to retire earlier, paying for private medical insurance until you clock 65 to qualify for Medicare is very exorbitant.
The costs for health care are on the increase. This will keep being the main issue for people who are healthy along with those who have chronic conditions they are managing.
WILL YOU BE ABLE TO WITHSTAND A FINANCIAL DISASTER?
According to the Retirement Confidence Survey published in 2014, the Employee Benefits Retirement Institute stated that 29% of retiree respondents and 36% of worker respondents said they had below $1,000 in savings. Unforeseen expenditures, especially those associated with health care, can increase rapidly.
You ought to structure your retirement savings plan such that it can provide cash flows to take care of everyday expenses and also unplanned expenses or emergencies. Are you sure the plan you have currently is enough to cater for both types of expenses? Those who don’t like taking risk may think of working longer so as to increase the adequacy of their savings plan.
CAN YOU PRIORITIZE SAVING FOR RETIREMENT?
According to EBRI’s 2014 yearly Retirement Confidence Survey, a considerable number of workers state that they neither have investments nor savings. 53% of workers allude to cost of living and daily expenditures as the top reasons for their inability to save for retirement. Nevertheless, if you fail to prioritize retirement savings, nobody else can help you with that.
Keep in mind that there’ll always be something making demands on your finances. Being able to prioritize your budget is pivotal to determining your retirement timeline. The earlier you prioritize saving for retirement, the earlier you can confidently say hello to retirement.
This material was prepared by an independent third party.