Five Things to Consider in 2019
1. Social Security Benefits
Social Security income is widely considered to be the foundation to one’s retirement income. Statistics show that on average, SS benefits account for 40 percent of income in retirement to the average earner. The timing of when to turn on lifetime benefits is more complex than most people realize. There are currently 81 age combinations and more than 567 different sets of calculations to consider when determining how and when to apply for benefits. Utilizing advanced software to help assess an individual’s combination options is commonly used when evaluating timing options.
2. Medicare Strategies
Another complicated topic to consider is Medicare Planning. Commonly referred to as “alphabet soup,” Medicare decisions can be very confusing and a poor understanding of your options can result in excessive medical expenses during a retirement lifetime. Although all aspects of retirement planning are important, this is a big one. It is advisable to work one on one with a Medicare Planning expert in order to fully understand your options and the long-term effects of the different choices available.
3. Monthly Household Expense Budget
As retirement nears, it is important to determine what amount of income is needed to cover everyday bills and lifestyle costs in order to plan for needed income in order to maintain one’s standard of living. Additionally, there is usually a need to solve for a greater amount of income to account for taxes, travel and other incidentals as well. This is a critical exercise in helping to determine a starting point for income planning for retirement. There are many templates available for completing an expense budget analysis.
4. Investor Risk Assessment
When approaching retirement, it is critically important to evaluate your risk profile. There are primarily two stages in our financial lives: accumulation and distribution. During our working years, we save and accumulate in preparation for retirement. Upon retirement, we face a new set of challenges which includes “how do I live off my nest egg without running out of money?” This happens to be the No. 1 fear of retirees today. During retirement years, if you are overallocated to investments that present too much risk for that stage in life, you could dig a hole you may never get out of. There are a variety of ways in determining one’s risk tolerance; it starts with understanding that you may not have the same risk tolerance while working as you would in retirement.
5. Written Income Plan
Putting all these moving parts into a visual report can provide a clear picture of how all this comes together when determining the timing of retirement. A properly constructed income plan will show the timing of various income resources such as Social Security and pension income. Additionally, a stated income goal can provide projections on the sustainability of the investment nest egg as portions are needed to fill income gaps. Through conservative projections, you can determine very easily whether there will be enough to maintain a standard of living throughout a 25- to 30-year retirement period.
Advisory services are offered through Retirement Solutions Group, Inc., a registered investment advisor in the state of Tennessee. Insurance products and services are offered by independent insurance agents. RSG and the independent insurance agents are not affiliated with or endorsed by the Social Security Administration or any government agency.