While there are some who don’t begin considering retirement until they reach their 50s, it’s not too late to get started on your retirement planning. But a late start may mean you may have to face some unfortunate realities.
Retirement can be overwhelming. Let’s look at those things some forget to plan or didn’t even realize they needed to plan. First, some people aren’t prepared emotionally to retire. You need to determine how you will spend your time and what it might cost.
Medicare. You must enroll in Medicare at 65, but if you delay until 66, you’ll have to take the initiative because it’s not automatic. If you’re late, there’s a 10% penalty for every 12 months you snooze. If you wait 24 months, there’s a 20% permanent penalty because you forgot to re-enroll. Enrollment is three months before to three months after your 65th birthday. If you delay taking Social Security, you’ll have to enroll in Medicare on your own.
Health-Care Costs. Studies show that health care will cost about $250,000 for a couple in retirement, or about $5,000 per year per person. People frequently underestimate health-care costs in retirement—they forget prescription drug and long-term care costs—which can use up a lot of money. The same is true of dental expenses, and Medicare doesn’t cover dental.
Major Purchases and Repairs. Some fail to account for major purchases, such as home repair and upkeep. Many retirees are caught short on the occasional large purchase, so examine your budget annually to be sure you consider things that come up quarterly or semiannually. Remember that life events like weddings, graduations, and spoiling the grandkids can be major unanticipated costs.
Planning for a Long Life. This is very important because if you will live to age 90, will your money last? There are many things to consideration when you think about 25 years in retirement, like long-term care.
Estate Planning. Estate plans aren’t just for the wealthy, and if you’re not pro-active, all those decisions will be made for you by the state. Create a will, be certain that your beneficiaries are correct and up to date, and make sure you have a power of attorney and health-care directive.
Reference: The Washington Post (October 15, 2016) “It takes a lot of work to be ready to retire. Don’t forget these things.”