Are you a mature adult? Are you beginning to think about retirement planning? Are you looking for some financial tips that will help you save money and live your best life during your golden years?
Like all budgeting, financial planning for seniors involves some careful homework and forethought. Yet the right plan can leave you with the assurance that your bank account isn’t something you’ll need to stress about each month.
Here’s what you need to know.
Social Security
One important way to begin planning for your retirement is to live within your means now. You’ll need to put away a little money each month so that you’ve got enough to live on when the time comes.
When you work, you’re paying taxes into Social Security. You can start receiving benefits as early as age 62. If, however, you retire before your full retirement age, you won’t be entitled to your full benefits. Read about Taxfyle
Your actual retirement age depends upon the year you were born. Those born in 1955, for example, can retire at age 66 and 2 months, while those born in 1957 can retire at age 66 and 6 months. If you were born after 1960, you won’t reach full retirement age until you’re 67.
If you choose to keep working beyond your full retirement age, you can increase your Social Security benefits by increasing the amount of money you’re contributing.
If you’re over age sixty-two and receiving Social Security benefits, your family can also receive benefits. Your spouse, for example, can begin receiving benefits if they’re over age 62 or caring for a minor or disabled child.
Your under-aged children can also get benefits if they’re under age 18, enrolled in college as full-time students, or disabled.
Other Retirement Plans
Another important part of your retirement income will be your 401K. Your employer likely offers a 401K or something similar that you can make tax-sheltered contributions to monthly. Your employer will also make matching contributions.
The funds in your 401K are invested in things like stocks, bonds, and mutual funds. 401K’s provide a number of tax advantages and can get rolled over if you change jobs. You can begin withdrawing money from your 401K at age 59 1/2 without having to pay an early withdrawal penalty.
An IRA may also be part of your retirement plan. With a traditional IRA, you’ll make contributions to your retirement each month that you can deduct on your tax return. Anything you earn can be tax-deferred until you withdraw money in your retirement.
With a Roth IRA, you can contribute to your account using the money you’ve already paid taxes on. You can then make tax-free withdrawals in your retirement.
IRA’s can be a nice supplement to your employer-sponsored plan. It can also help you gain access to a wider range of investment choices. IRA’s are another way that you can take advantage of tax-sheltered growth on your investments.
Budgeting
Living on a fixed income means that you’re going to need to be even more careful about budgeting. You can build a simple budget for yourself using a spreadsheet.
First, you’ll need to list your monthly income from all sources, and then list all of your expected expenses. Think about things like your mortgage, taxes, insurance, and grocery bills.
You’ll need to keep in mind your health care costs, including your anticipated drug costs and doctor visits. While some preventative care is free with insurance, other costs may need to come out-of-pocket.
Seniors can also purchase burial insurance, which can pay for funeral costs and ease the burden on their loved ones in the event that they pass on. Remember that anything from funeral homes to cremation cost can really add up and become overwhelming if you’re loved ones aren’t prepared.
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Extra Tips on Financial Planning for Seniors
It’s important to be realistic and carefully plan your budget each month.
Automating your finances can also be helpful as you’ll have less to remember each month. If you’re not sure how to ensure that you’re bills are getting automatically paid, ask a trusted friend to help you set up an online account that connects to your bank account. This way, you won’t need to remember to put a check in the mail every month in order to avoid falling behind!
Make sure that any income you’re receiving is also direct-deposited. This will save you the time and hassle of getting to the bank with your check before the bills are due.
As a senior, you may also wish to look into Medicare improvement plans that can help pay for prescriptions and other out-of-pocket costs. Paying a little more into these each month could end up saving you a lot of money in the long run.
You may also wish to maintain a separate account for cost-of-living expenses. Additional accounts can get used for other costs.
Seniors can downsize in order to save on housing and utility costs. Many senior condo and housing communities are designed to keep your financial needs to a minimum and your lifestyle simple.
Seniors can also enjoy discounts on things like food, travel, and entertainment. Look into discounts before going out to eat or investing in a trip.
A Strong Financial Future
Financial planning for seniors involves more than just having a retirement account. You’ll need to watch your spending and live in a way that keeps your life simple. With some careful research, budgeting, and planning, you could be on your way being a carefree empty-nester in no time!
Don’t stop planning for your future now. For more great advice on family, finance, and travel, read our blog today.
