Getting Ready to Retire – How to Ensure You Will Have Enough Money to Make it Happen and Live Comfortably

Written by Veselina Dzhingarova

Retirement is something that many people look forward to, work hard for, and count down the days until it becomes a reality. No longer having to work, spending your days doing whatever it is you feel like doing, and just basically enjoying your time is a goal that many people share. Of course, a happy and financially sound retirement doesn’t just happen by chance. Instead, it takes plenty of advanced planning, saving, and preparing.

So, as you grow closer to your retirement date, how can you ensure that you’ll have enough money to retire on time and live comfortably? Here we’ll take a look at some tips and advice that can help answer these questions.

Speak to a Retirement Planning Professional

One of the best pieces of advice for soon-to-be retired individuals is to make an appointment to speak to a retirement planning professional. Even if you think you are fully prepared, organized, and ready to retire from a financial standpoint, it’s still wise to touch base with a professional that can look over your savings and provide you with a detailed plan.

Berger Financial Group, a Minneapolis retirement planning group, stresses that a solid financial plan will ensure the savings you have amassed will stretch the distance. You want to be sure that you understand how much money will be available to you, and the best ways to stretch it and make it last.

Consider Downsizing

As you approach your retirement date you may also want to think about downsizing your lifestyle in general. If you own a home, now is the time to ask yourself if that much space and land is needed. It could be that downsizing is a better plan both financially and from a maintenance standpoint. If you plan on doing a lot of travel during your retirement years, owning a small condo with no exterior maintenance could make more sense.

Downsizing also means you can find something cheaper, which means more money goes into your retirement savings.

Create a Brand New Budget

It’s also wise to create a brand new retirement budget. This takes into account all your expenses and how much money you will have coming in once you are no longer working. It may be that you need to cut back on some expenses in order to make the budget more manageable. Knowing this information in advance will prevent you from over-spending.

Take a Look at Your Investment Portfolio

If you have any investments, now is the time to take a look at those too. You don’t have to stop investing just because you are retired. It may just be that you want to change things up and diversify where you are investing your money.

Setting Yourself Up for a Happy Retirement

By following these steps, you’ll be setting yourself up for a happy and comfortable retirement, allowing you to have the break you deserve.

How to Avoid One of the Biggest Retirement Mistakes

Written by Danielle Kunkle

There are thousands of baby boomers nearing retirement every day. According to Investopedia, about 75% of these baby boomers admit to being behind on saving for retirement. The other 25% may soon come to realize that they aren’t as prepared as they thought they were.

They may come to this realization because most baby boomers are unaware of the fact that Medicare, although paid for during your working years, isn’t free.

Most new Medicare enrollees are surprised to find out that everything they have been paying towards Medicare was only for one part of Medicare, Part A. Once they calculate their potential costs for all the other parts of Medicare, they conclude that their savings aren’t as adequate as they thought.

So how do you avoid the biggest retirement mistake you could make? Simple, you need to plan. Follow the steps below.

Discuss Things Beyond Money with Your Financial Advisor

Now that you know that Medicare isn’t free, you need to discuss the costs of your healthcare in retirement with your financial planner.

Not only that, but you need to discuss with them how often you go to the doctor, what kind of lab work and tests you get on an annual basis, and anything else that might cause a divot in your savings. This may seem like too personal of a subject to discuss with a financial planner, but it’s necessary.

According to Fidelity, on average, a couple will need $280,000+ in retirement savings just for healthcare costs. Discussing your health status can help you and your financial advisor plan for potential expenses such as needing a Medicare Supplement plan or long-term care coverage.

Be Ready for the Unexpected

Never assume that your health will be in tip-top shape for the rest of your life. Yes, you may be healthy now, but that could literally change within a day. Similar to an emergency fund, set aside money in the chance that you become chronically ill.

Suppose you get diagnosed with cancer. Chemotherapy alone costs tens of thousands of dollars in one calendar year, not to mention the surgeries you’d need.

You’ll want to be prepared for an unexpected diagnosis just like this one. If you become ill, the last thing you will want to worry about is how you will be able to afford to fight for your life. Put the right coverage in place to protect yourself.

Plan for Possible Loss of Employment

We’d like to think that our place of work will always have a spot for us when we get into retirement age. However, ageism in the workplace is no myth. Sometimes, employers see the new, younger applicant walking in as the best person to take over a job you’ve been doing for years.

With more baby boomers planning to continue active work past the age of 65, the possibility of having your position taken away from you grows. Therefore, you should never bank on always having that biweekly check flowing into your account.

Have money set aside to replace your income if you were to lose it suddenly.

Set Up an HSA

An HSA is a health savings account. Having this account allows you to be able to put away money without having taxes being taken out of it. The purpose of this account is to help pay for qualified medical expenses.

As of 2019, the maximum contribution amount for an individual is $3,500, while the maximum contribution amount for families is $7,000. Those who have an HSA and are at least 55 years old is allowed to contribute up to $1,000 extra each year.

Qualified medical expenses you can use your HSA to pay for include but are certainly not limited to, hospital services, long-term care, dental and vision services, and even insurance premiums. You can also use your HSA to cover your immediate family member’s qualified medical expenses.

How to Set Up an HSA

To be eligible for an HSA, you must be enrolled in a qualified high-deductible insurance plan. Once you have that setup, you will be able to set up your HSA either through your employer or a bank.

Next best step is to have money be auto drafted from your checking account to your HSA. This will help you make sure you always have a steady flow of money going into your savings account.

Health Savings Accounts with Medicare

Having Medicare while contributing to your HSA is not allowed. If you enroll in any part of Medicare, you will no longer be legally allowed to contribute to your HSA.

Therefore, to continue to be able to contribute to your HSA past 65, you must delay enrolling in Medicare. The only way you can do this without having to pay a late penalty later is to continue to have creditable coverage.

The most common form of creditable coverage past age 65 is a large employer group health plan. If you continue to work for an employer with 20 or more employees and keep their group plan, you can delay Medicare and continue to contribute to your HSA.

Start Now

The biggest retirement mistake is just failing to plan ahead. If you haven’t been putting enough into savings, start now. Try to start at least doubling the amount you save monthly to try and make up for lost time. The more you can put away now, the better your retirement will be in the long run.

Getting A Mortgage When You Retire

Written by Jeremy Biberdorf

If you are nearing your retirement, and want to re-locate, you may be wondering how you can manage the move financially. You may assume that because you do not have a regular paycheck coming in, you will not be able to get a mortgage to help you purchase a property.

However, it is possible to get a mortgage even after you have retired. You can check the best calculator to estimate your mortgage payment in Texas. However, it’s important that you pay attention to certain factors that are relevant to a mortgage after retirement. These factors help to determine whether or not you can obtain a mortgage. It’s certainly worth taking a look at these factors as although it may be harder to borrow money after retirement, it’s definitely not impossible.

Using the drawdown from retirement method to calculate income

Calculating available income is an important aspect of determining a mortgage application. One of the most common means of determining income for retirees is the drawdown from retirement method. In the case of anyone who is at least 59 ½, it’s possible to use withdrawals from a retirement account as a means of determining income. Withdrawals for at least the last two months are taken into account.

Using the asset depletion method to calculate income

Another method that is used to determine income, when a retired person applies for a mortgage, is asset depletion. This involves the calculation of a person’s financial assets after which the cost of down payment and closing costs are subtracted. 70% of the resulting figure is then divided by 360, to determine a monthly figure.

Why does the debt to income ratio matter?

It’s not just income that is important in determining whether a retiree can acquire a mortgage. The debt to income ratio means that no more than 43% of a person’s income can go towards servicing a debt. It’s important to be aware that this includes any debt for which a person co-signs, such as the mortgage of an adult child.

What other factors may be important?

There are other factors that are also taken into account, when making a decision on a mortgage application from someone who is retired. The housing expense ratio means that payments made for a mortgage, mortgage interest, taxes and insurance cannot be more than 36% of available income.

Even if this ratio, and other factors, are satisfied a poor credit score can still make it difficult for a mortgage to be awarded. Ideally, a credit score of 780 should be attained, in order to stand the best chance of success.

You can see that it’s not easy to acquire a mortgage, if you are looking to move home after retirement. However, it is possible to succeed with a mortgage application, depending on the situation with your income, expenditure and credit rating. Not having a regular paycheck does not necessarily mean you will not be successful, you may still be able to get help.