What you need for retirement

This was originally published on Monday, October 28, 2018, in the Pacific Daily News.  Click here to subscribe to the PDN. 

With retirement on the horizon, hopefully, you have been saving to live the retirement life you did not have time to live while you were working. If you are getting close to retiring, be sure you are ready before making the decision to retire. You should take into consideration how much you have in savings versus your retirement saving goals.

How much do you need? Create a retirement budget. Will you have enough saved to continue the lifestyle you are living now? Are you eligible for military or other pensions?  How much will you be receiving from Social Security? You may want to consider a part-time job after you retire. If the shortfall is larger than you expected, you may not be ready to retire. If you want to know how much you may receive from Social Security, you can go to https://www.ssa.gov/OACT/quickcalc/.

You can take money out of your retirement at any time, but be aware you will be penalized by being heavily taxed. Once you reach the age of 59 ½ you will not be penalized to withdraw but at the age of 70 ½ years, you are required to start withdrawing from your traditional individual retirement account. If you have a Roth IRA, there is no time limit to when you must start withdrawing from your account. If you have a pension from being in the military or worked as a federal or local civil servant, your disbursement may be reduced to compensate for your Social Security.

Timing.  The time at which you retire makes a huge difference, especially when you start collecting your Social Security. You can start collecting Social Security at 62 years of age, but you can hold off until you are 70. Those several years can add several hundred dollars to your monthly Social Security check. Also, take into consideration inflation. A $100 today is going to be worth a lot less in 15 or even 30 years from now.  By working a few more years you can also increase your nest egg.

Healthcare.  If you are retiring early, remember that you will need healthcare before you are eligible for Medicare at 65. Does your employer have health benefits for retirees? If not, do your research to find the best healthcare possible. You may have to get a physical evaluation and disclose any medical conditions you have. If you are in great health, the costs will be much lower than someone whose health is not as good.

Family.  If you are married or still have minor children when you retire, be sure to talk with them about any financial changes that may happen. Be sure you are all on the same page and that you are willing to work together to stay on budget.

Plan your estate.  No matter your assets, be sure that you have at least a will.  Consider getting a living will and a healthcare proxy to ensure your wishes are respected in the event that you are incapacitated and no longer able to communicate or make decisions.

Michael Camacho is president and chief executive officer of Personal Finance Center. He has more than 24 years of experience in retail banking and at financial institutions in Guam and Hawaii. If there is a topic you’d like Michael to cover, please email him at moneymattersguam@yahoo.com and read past columns at the Money Matters blog at www.moneymattersguam.wordpress.com.

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