Courtesy of Kathrine Kreger [email@example.com]
Millions of Baby Boomers are about to hit retirement. Some have been fortunate enough to save a great deal and be financially secure. Others will have to watch their spending. Here are five things that everyone who is nearing retirement should think about before leaving the workforce.
1. Maintaining a Standard of Living
Living expenses can be quite a bit lower during retirement than they were during a person’s working life. There will be no need to commute to work on a daily basis, nor will there be the need to buy nicer clothes to wear to work. Eating at home for lunch will be cheaper than buying out. In spite of these cuts to the monthly budget, it is still estimated that most retirees will need about 80 percent of their pre-retirement income to keep the same standard of living.
2. Social Security Payouts
Most Americans will have to rely on Social Security payments for a portion of their retirement income. For some, these payments will make up the majority of income during retirement. The average monthly Social Security payment that most people can expect to receive is around $1,200 per month. For most people, this will be a fraction of the income that they made during their working lives. Those who have trouble getting their proper benefit level paid should check out a Grand Rapids Social Security lawyer.
3. Medical Care Is Not Free
Medicare is a great program that provides a level of medical coverage for retirees, but it does not cover everything. The cost of a Medicare supplement and copays can come in close to $5,000 per year for the average retiree.
4. Expect to Live a Long Time
Most retirees can expect to live several years after saying goodbye to the workforce. Many retirement experts recommend that retirees plan for living to at least age 85. This means that pulling out all retirement funds and living it up in the first year or two of retirement is not a good idea.
5. Working Longer Can Increase Social Security Payments
There is a penalty incurred by drawing on Social Security immediately after turning 62. The payments that a person can expect to receive will be much lower than they will be if they work until their full retirement age of 67. Of course, a person will need to live quite a while before they make up the difference so most people will opt to begin taking out funds at age 62.
Retirement is a time that most people look forward to. For those who have saved up money to enjoy the golden years, retirement can appear much like it does in the retirement communities pictured on television. Knowing what to expect financially can take much of the fear out of the process, and can help retirees leave the workforce more seamlessly.