Of course, the first consideration that everyone takes into account when they are planning on retirement is if they will have enough money to get by on once they are not working. This will take some figuring, but it is essential to determine first and foremost what the current income and expenses are, and what they will be once you retire.
Social security is a part of retirement and it can be confusing, as can Medicare, and the whole issue of supplemental insurance. Ideally, you should have some idea of what the benefits will be, and when to apply. If you retiring early, it’s also a good idea to determine how much you will lose monthly from early retirement. If your spouse is retiring, or when they do, they should be aware of spousal benefits, which gives them a certain percentage of their spouse’s benefits, and generally increases their payments. Of course, health insurance is a big fact, and finding a supplemental insurance is a must.
If you have a pension plan, chances are that there are several options as far as payment. One of these may be to reduce the monthly payment in order for the spouse to continue receiving monthly checks even if their spouse dies. This is an important factor that should be considered, especially if they will be relying primarily on this pension as a source of income.
401(k)s are great, but many people are confused when it comes time to withdraw money or rollover into IRAs or Roth IRAs. Everyone should talk to an investment counselor to determine their best plan of action. Ideally, these should be a continual source of income in the future.
Some things will become cheaper in the future after retirement and others will not. Car insurance, for instance may be less expensive once the retiree is not driving back and forth to work, however, it is important to remember that even though only a percentage of social security is taxed, the retiree will still pay taxes on social security, pensions, and other investments. Since this will not be deducted on a monthly basis, it will be up to the retiree to make arrangements to pay this when tax time comes around.
Many future retirees are planning on traveling or down sizing. It is always a good idea before retiring to eliminate as much debt as possible, and to check out the options when it comes to moving to another location. Some areas are less expensive to live in than others.
Retiring can be a good experience and a chance to enjoy those things in life that we never had time to do before. However, it can be a lot better if we plan for it, and are aware of all the benefits and problems involved.