It's never too early to start planning for retirement, especially if you intend to stay active well into the future. Although there are a few factors outside your control, such as election results and world events, you have the power to invest some of your income and watch it grow over time. Before you start exploring your Independent Living options, use these tips to determine how much money you need to retire comfortably.
In times of economic uncertainty, it's important to remember that you're in control of your finances. You can't conquer inflation or reduce the unemployment rate, but you can budget carefully, focus on saving and spend your money wisely. Before you create a budget or set savings goals, you need to estimate your future expenses.
Generally, you can expect to spend 55% to 80% of your current annual income. If you plan to travel extensively, add 6% to what you're earning now to ensure you have enough money to maintain an active lifestyle. Although retirees tend to have lower housing expenses, you may need to increase your budget to account for increased travel, entertainment and healthcare costs.
These are just a few of the estimated costs to include in your budget:
As you age, it's important to see a doctor regularly and get preventive health screenings. To create an accurate estimate of your expenses, you need to know exactly what your insurance covers. Most people don't become eligible for Medicare until age 65, so if you retire at a younger age, you'll need to sign up for private coverage. Even if you do qualify for Medicare, you'll still need to pay deductibles, copays and coinsurance for covered services.
Many health insurance companies have online portals that let you estimate the price for each healthcare service you need. Take time to get prices for common procedures, such as a colonoscopy, skin cancer screening and cholesterol testing, to determine how much you can expect to spend each year during your retirement.
If you have a chronic health condition, don't forget to account for prescription medications, equipment rental, skilled nursing care and other medical expenses. For example, if you have diabetes, you may need a continuous glucose monitor or an insulin pump. Overall, you can expect to spend about 15% of your income on healthcare expenses.
Due to the power of compound interest, it's wise to start saving for retirement as early as possible. Before you set up any accounts, meet with a certified financial planner to discuss your future financial needs. Although there are many types of retirement plans available, the 401(k) and Individual Retirement Arrangement (IRA) are the most common.
A 401(k) allows you to contribute a certain percentage of each paycheck into an investment account. Over time, the account balance grows, giving you more security when you're ready to retire. An IRA works much the same way, but the annual contribution limits are much lower. Let your CFP know if you have a pension, Thrift Savings Plan (TSP) or other type of retirement account to consider in the planning process.
Moving to a Life Care community like Montereau, has many benefits. This senior living option has multiple levels of care, such as Independent Living, Assisted Living, Skilled Nursing and Memory Care. As your needs change, you don't have to worry about moving to a whole new community. You can simply move from one area of the CCRC to another.
From a financial perspective, moving to a Life Care community is a great way to manage your expenses. Instead of worrying about hiring a landscaper or paying someone to fix the furnace in the middle of the winter, you can rest easy knowing that the community has staff members to handle these problems. This makes your monthly expenses much more predictable. Montereau offers multiple levels of care, giving you extra peace of mind.
With careful planning, it's possible to create a future filled with freedom instead of anxiety about your financial situation. Schedule a tour to learn more about how living at Montereau can help you minimize your expenses, or check out our financial calculator to see which floor plan fits your lifestyle best.
Tuesday, August 29, 2023
Is there a topic you’re interested in learning more about? Send us a message. We’d love to hear your suggestions.