Champaign, Ill - Four tips for the final countdown to retirement:
Reassess your living expenses. When you budget for retirement, think about how living expenses could and should change. Healthcare costs are likely to increase as you progress through retirement.
According to the Employee Benefit Research Institute:
The average 65-year-old married couple would need $213,000 in savings to have at least a 75% chance of meeting their insurance premiums and out-of-pocket healthcare costs in retirement. Consider purchasing a supplemental or long-term care insurance policy. Also, don’t forget the cost of living will go up over time. The average annual rate of inflation over the past 20 years has been approximately 2.5 percent, according to the Consumer Price Index.
To estimate your income needs in retirement:
Use a percentage of your current income as a starting point—anywhere from 60 to 90 percent, depending on your retirement goals. Consider all income sources. Estimate how much your retirement plan, social security and other forms of income can provide monthly. For Social Security, calculate your benefits at ssa.gov. The amount you receive depends on your earnings history and other unique factors. Although you can receive benefits as early as age 62, if you wait until full retirement age (66 or 67, depending on your birth date) or later (up to age 70), it will result in a bigger benefit. Review retirement accounts—including employer benefits, Individual Retirement Accounts (IRAs) and traditional investments.
Manage taxes and rely on a qualified professional for help.
You may want to withdraw money from taxable accounts first to allow employer-sponsored plans and IRAs more time to potentially benefit from tax-deferred growth. Keep in mind, you’re required to begin taking minimum distributions from tax-deferred accounts at age 70½. If you work in retirement while receiving Social Security, understand that income you earn may result in taxable benefits. If leaving a financial legacy, consider how estate taxes and income taxes figure into your overall decisions.
Why pay off debt? Entering retirement debt-free will put you in a position to modify your monthly expenses in retirement if needed. The alternative of having a mortgage, loan and credit-card balances puts you at the mercy of those monthly payments.
It's important to pwwer up savings. In these final few years before retirement, you’re likely to earn the highest salary of your career. Save and invest as much as you can in your employer-sponsored retirement savings plan and IRAs. If you’re 50 or older, you can make catch-up contributions (an additional $6,000 to your 401(k) and $1,000 to your IRA).
Whether retirement is 10 years or decades away, the professionals at Busey Wealth Management can review your financial picture to help ensure you’re prepared.
Additional financial education tools and resources can be found on busey.com, look under Resource Center and click on Financial Education Tools. Complete the Retirement Assessment to take the guesswork out of planning your financial future. Also, you’ll find online calculators, planning checklists, budget worksheets and more. Visit any Busey location, call 1.800.67 l Busey or visit busey.com today.
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