5 Questions You Need to Consider for Retirement

Retirement-related anxiety is a common theme among Americans. According to GOBankingRates’ 2019 retirement survey, 64 percent of the survey’s 2,000 respondents expect to retire with less than $10,000 in savings. Moreover, almost half of all respondents said they had no money set aside for retirement.

These numbers are in stark contrast to the general retirement savings rule of thumb, which suggests you should save at least 15 percent of your annual income before taxes. However, this is just a guideline and might be different for you based on how you wish to live post-retirement. To craft a comprehensive retirement plan, be sure to ask the following five questions.

Will I Continue Working?

Another option that many entertain is opening a business or consultancy practice in retirement. Self-employment in retirement can give you a sense of purpose and accomplishment and also has tax benefits, but the latter shouldn’t be the only reason you create a company.

Where Will I Live?

Moving to another state should also be something you at least consider. Many people choose to relocate to an area near their children or other family. In addition, some states are more financially beneficial for retirees. Wyoming, for instance, is one of seven states that doesn’t have income tax. It was also ranked as the most tax-friendly state for retirees by Kiplinger. Retiring in Wyoming, then, will usually require less savings than doing so in New York or California. Also, more adventuresome retirees are considering and moving to foreign countries to retire, where the cost of living may be much lower than in the states. Costa Rica, Panama, Ecuador, and Belize are all popular locations for expat retirees at this time.

How Much Will I Need for Medical Expenses?

This money is just for out-of-pocket costs. Medicare only goes so far, so plan on having to fill in the gaps in coverage.

How Much Money Will I Spend in Retirement?

Rather than guess your annual expenses on vacation and recreation, consider meeting with a Certified Financial Planner. These professionals can factor in your spending habits, life expectancy, inflation, and other factors, to accurately gauge how much you should save for retirement.

When Should I Take Social Security?

In 2019, people younger than full retirement age who claimed Social Security were taxed $1 for every $2 they earned above $17,640. If you start taking Social Security at 62, your monthly benefits will be permanently reduced by 25 percent.

Retirees can apply for Social Security benefits, when eligible, by visiting a local Social Security Administration (SSA) office. They can also complete an application online on the SSA website or call 1–800–772–1213.

Originally published at https://robertmryerson.net on December 2, 2020.

Robert Ryerson authored the 2016 book What’s the Deal With Identity Theft?: A Plain English Look at Our Fastest Growing Crime.