Retirement comes with a lot of freedom, including more free time to spend your money. The nest egg you spent years building will outlive you, but enjoying all that free time might get expensive.
It’s easy to lose track of how much you’re spending when you’re having fun on the golf course, taking that dream trip to Hawaii you’ve been planning for years or even just socializing with friends over dinner and drinks. It all adds up quickly.
If you’re worried that you’re spending too much on activities, it might be time to create a financial plan. A Certified Financial Planner™ (CFP®) can go over everything you will need to plan for throughout your retirement including: tax planning, creating a will, choosing a health care proxy, and setting up trusts to avoid probate.
Having someone help you create a budget can also keep spending in line and alleviate that pesky feeling of buyer’s remorse when you want to go on a big trip, join a pricey health club or pick up a new, expensive hobby. We have three main tips to help you prepare for the enjoyable retirement you deserve:
- Do your research.
- Theresa Becker, CFP® and Vice president/Financial Planning Officer at Rockland Trust, recommends the first thing you should do any time before retirement is to register with Social Security.
- Becker suggests you register online at ssa.gov before retirement to avoid being scammed, as someone else may try to register as you in order to steal your identity.
- The website will inform you of the monthly benefit amount you can start receiving at 62 and at your Full Retirement Age (FRA). Full retirement age is based on the year you were born. Those born between 1954 and 1959 reach FRA between 66 and 66 years, 10 months. Anyone born 1960 and after has an FRA of 67. The longest you can wait to collect is 70 years old. Each year you defer your benefit past FRA earns you 8 percent per year compounded. Claiming before FRA decreases your benefit via a formula.
- Start thinking about Medicare six months before you turn 65. You can make an appointment at your Social Security office within three months before you turn 65 to apply for benefits. To get an estimate of your benefit, you can visit the website medicare.gov/eligibilitypremiumcalc or call 1-800-MEDICARE (1-800-633-4227). There can be penalties if you don’t enroll on time so it’s best to start investigating before you turn 65 years of age.
- Medicare Part A (hospital insurance) starts for everyone at age 65 (and is usually free). Medicare Part B (medical insurance) replaces and/or adds to health insurance and requires a premium be paid (usually deducted from social security). Becker advises that if you plan to work past 65 and you have creditable insurance such as a group or individual health plan with your employer you should consider delaying Part B (unless your employer requires you to file).
- In order to receive Part B when you are no longer covered by an employer, you will have to prove to Social Security that you were covered when eligible (your employer will provide documentation). Please keep in mind that neither retiree coverage, nor COBRA coverage are considered creditable insurance.
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- Plan strategically and conservatively.
- Find an objective advisor you can trust to help you avoid any retirement pitfalls and advise you on what age you should begin collecting Social Security.
- Don’t worry about what your friends are doing. Not everyone can afford to take a trip to Ireland, buy a new car or go out to dinner every weekend. Don’t try to keep up with the neighbors because you don’t know their plan or financial situation.
- Live within your means. It may seem like a good idea to charge big-ticket items, but reducing bills will help reduce the amount you pay out each month.
- Invest carefully.
- Now is not the time to play the stock market or move your entire savings. Avoid taking financial risks and instead make sure you have a solid financial strategy. Rockland Trust has an investment team who can help make sure your savings will last your entire life post-career.
- Becker shared a story about a couple -- a cafeteria worker and a janitor -- who lived in a small house. When they retired, they traveled all over the world. People may have been perplexed at how they could afford it, but their son was a financial planner who had helped them prepare for retirement and made it possible for them to enjoy it in the way they wanted.
Your retirement is just that: yours. Finding someone who can help you figure out if you’re on track to have the kind of retirement you envision is easy. Contact Rockland Trust today!
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