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Are you approaching that exciting milestone called retirement? Pre-retirement is a critical phase where thoughtful planning can make all the difference in the quality of your golden years. As a seasoned financial planner specializing in retirement, I understand the unique financial challenges and opportunities that pre-retirees face.

 You may be wondering

  • If you have enough assets to last through retirement
  • Where will my income come from
  • What will happen if I have a major healthcare issue
  • What will life be like when I stop working

 Whether you're looking to determine the optimal time to start claiming your Social Security benefits, seeking guidance on the best Medicare plans for your health needs, or developing a strategy for a consistent and reliable retirement income, I'm here to help. We'll work together to create a personalized blueprint that aligns with your retirement goals and aimed at a securing your financial future. Let's navigate this journey together, making your transition into retirement a smooth and confident one.


How much money will I need to retire?

This answer will vary based on the vision you have for your own retirement and the lifestyle you’ll want to live. That said, regardless of your chosen lifestyle, retirement is expensive. The important issue to understand is that Retirement is about INCOME and CASH FLOW. Of course, your savings are a crucial foundation of a Retirement Income paln. 

When you know how much guaranteed income you have from sources like Social Security and Pensions, you should be able to estimate how much additional income you will need to generate from your savings. Maybe you would want the growth from the stock market to create your income, but you may need to be willing to accept the risk of loss. You can also invest in income-generating instruments, some that could offer a guaranteed income stream for life (similar to a pension) but you have to consider the lack of liquidity as a consequence of this type of strategy.

While everyone’s situation is unique, one rule of thumb is that you’ll need 70 to 90% of your pre-retirement income to maintain your current standard of living. While these numbers may seem high to you (and they very well may be), you can also research how much money retiree households (led by someone age 65+) actually spend. Fortunately, the data is easily accessible and published annually by the U.S. Bureau of Labor Statistics. According to their most recent consumer expenditure survey, the average retiree household spends $52,141 per year. Using this number as a baseline, keep in mind that the figure will only grow for those further away from retirement.

When should I begin taking Social Security?

If you can continue to work and delay Social Security benefits, you should probably take advantage of this distinct opportunity—as you aren’t entitled to 100% of your Social Security benefits until you reach “full retirement age” (FRA), currently age 67 if you were born after 1959. Opting to receive benefits before hitting your FRA will result in a permanent monthly benefit reduction (nevertheless, you can begin collecting at age 62 if you so choose).

More specifically, Social Security benefits increase by approximately 7% annually between the age of 62 and your full retirement age—before rising to around 8% each year between your FRA and age 70.

To illustrate the corresponding impact, let’s assume the full amount of your Social Security benefit is $1,000 a month: the amount you’d receive if you wait until your FRA.

If you claim benefits at age 62, your monthly benefit will decrease by approximately 30% to $700: meaning you’re missing out on $3,600 a year! Multiply that by five years (when you’d reach full retirement age), and that’s approximately $18,000!

Can I work and collect Social Security simultaneously?

Yes, you can. If you work before your full retirement age (FRA), the Social Security Administration has annual earnings limits. In 2023, the limit is $21,240. If you earn above this:

  • $1 is deducted for every $2 earned above the limit.
  • If you work in the year you reach FRA, the limit is higher at $56,520. Here, $1 is deducted for every $3 earned above.
  • Once you reach FRA, your earnings don't reduce benefits.
  • If benefits are withheld, they're used to recoup overpayments, and withheld amounts are refunded later.

How will I pay for medical expenses in retirement?

Healthcare—which includes health insurance, medical services, supplies, and drugs—ranks third among the most significant retiree household expenses, per the latest Consumer Expenditure Survey. On average, retirees spend $7,030 per year (or $586 per month) on these costs, the bulk of which goes to health insurance.

When most people turn 65, they become eligible for Medicare. This program consists of four parts, each covering specific services. Known as “Original Medicare,” Medicare Part A and Medicare Part B dictate the government pay providers directly for services received. Most people don’t need to pay a premium for Part A (hospital insurance) but are required to do so for Parts B, C, and D. While understanding Medicare basics is essential, you’ll also want to avoid these common mistakes.

  • Not SIgning up when you turn 65 (actually you have 90 days after your 65th birthday & there are exceptions). There can be permanent penalties if you make this mistake
  • Signing up for the wrong plan. Finding the correct type of plan and coverage is essential. 

What are some other money-saving strategies for retirement?

Some lesser-known ways to help boost your retirement savings include catch-up contributions in your retirement accounts and health savings accounts (HSA).

When you turn 50 (or are slated to hit this milestone by the end of the calendar year in which the plan year ends), the IRS allows you to make annual “catch-up contributions”: additional contributions you can make above standard limits to your 401(k)s and IRAs. This feature is offered to encourage savings and help ease the financial burden of retirement, especially if you didn’t save enough when you were younger.

You can use a health savings account (HSA) to pay for qualified out-of-pocket healthcare expenses, including deductibles and copays. HSAs are designed to help people with high-deductible health insurance plans (HDHP) pay for such expenses. As account balances roll over every year, it’s much easier to save for future healthcare costs in this regard.

Should I pay off my mortgage before retirement?

If you aren’t robbing one of your retirement accounts to pay off your mortgage, it often makes sense to retire with as little debt as possible. Doing so will allow you to live a more comfortable lifestyle, especially when you consider that housing is the most significant expense for the average retiree household and represents almost 36% of annual expenditures.

One consideration is if you have a very low interest rate, would it make sense to invest the money in a guaranteed or conservative investment in order to get a higher return. There are calculations and assumptions that should be based on your individual circumstances.

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No matter what stage of life you are in, let me help you pave the way so that you can live a comfortable life.  Together, we can develop your PERSONALIZED financial plan that will help you work toward reaching your goals and protecting you from being severely impacted by potential risks you may face - so that you can look forward to preparing for retirement and living a life with dignity.

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