We are often advised to commence retirement planning as soon as we enter the workforce, and there are certainly valid reasons for such counsel. The earlier you initiate your retirement preparations, the more financially secure you will be in your post-working years. If you are currently approaching your “Golden Years,” it is essential to take some additional steps to ensure that you are prepared for retirement. To guide you in this process, a Murfreesboro estate planning attorney at Bennett | Michael | Hornsby discusses some important retirement planning steps.
- Select Your Retirement Destination: While you may have contemplated your retirement location for many years, it’s prudent not to make a final decision until you are close to retiring. Emotionally, you may be deeply attached to your current residence, but as retirement age approaches, you may realize the cost of staying there. If you anticipate living on a fixed income during retirement, it might be a good time to consider relocating to an area with a more favorable cost of living. If you are considering retirement abroad, International Living publishes a comprehensive guide of “The World’s Best Places to Retire” each year. Whether you decide to stay or move, it’s time to make that final decision.
- Estimate Social Security Retirement Benefits: Do you know the precise amount of your Social Security retirement benefits when you retire? Many individuals do not. The amount you receive depends on your age when you begin collecting benefits. The government requires you to wait until your “full retirement age” for the maximum payout, which is currently 67 for those born in 1960 or later. You can begin collecting as early as age 62, but your monthly benefit will be reduced. Conversely, your benefits increase by 8 percent for each year you delay collecting payments after full retirement age, up to age 70. To gain a better understanding of your retirement benefits, you can use the Retirement Estimator on the Social Security Administration’s website.
- Establish a Long-Term Care Plan: Statistically, a 65-year-old entering retirement today faces a 70 percent chance of requiring some form of long-term care (LTC) during their lifetime and 20 percent of today’s 65 year olds will need it for longer than 5 years. These odds rise with each passing year, and if you are married, your spouse shares these risks. Medicare and most private health insurance policies do not cover LTC expenses. However, Medicaid can cover these expenses if you qualify for benefits. With an average annual cost of over $100,000 nationwide, more than half of all seniors turn to Medicaid for assistance with LTC expenses. Unless you can afford to pay for LTC out of pocket, it is advisable to incorporate Medicaid planning into your estate plan before your retirement.
- Integrate Your Estate and Retirement Plans: While your retirement and estate plans may have been separate during your working years, as you approach retirement age, it’s crucial to combine these plans to ensure their alignment. As you enter retirement, it is common to make significant changes to your asset structure, and these changes should be reflected in your estate plan by completing a comprehensive review and revision of your estate plan as you near retirement age.
- Review All Financial Accounts with a Financial Advisor: Schedule a meeting with your financial advisor to clarify when you can begin taking distributions from your retirement accounts and when you must commence these distributions. Additionally, create a retirement budget. You may have estimated your expenses before, but as you approach retirement, it is wise to review and fine-tune your budget, considering any changes that may have occurred.
Contact a Murfreesboro Estate Planning Attorney
If you have additional questions or concerns about the steps you need to take to prepare for your retirement years, consult with an experienced Murfreesboro estate planning attorney at Bennett | Michael | Hornsby as soon as possible. Contact the team today by calling 615-898-1560 to schedule your free appointment.