1. How far will your retirement savings go?
It may seem a little late to think about how much you're saving, but how long your savings last depends both upon how much you have and how much you're spending. Finding out how much you're spending each month is usually the easier step because you already have most of that information at your fingertips. In addition to your regular spending, you may also want to include some expenses like Medicare or prescription costs.
Next, you should evaluate your estimated income from Social Security and other retirement benefits. You may want to use a retirement calculator to determine how long your retirement funds will last based on the monthly spending you have already calculated. You may also want to contact the Social Security Administration for an estimate of your Social Security benefits. In fact, how much Social Security income you receive may depend on WHEN you retire.
If it looks like your savings may fall a little short once you retire, you may want to think about eliminating or decreasing some of your bills while you're still working. For example, you may want to pay off credit cards or car loans prior to retirement. This is also the time that many people consider downsizing their home, which may lead to monthly mortgage and utility savings.
2. Will you outlive your life insurance?
It's important to review your life insurance regularly. If the bulk of your life insurance is through an employer-sponsored plan, it may be especially important that you understand the terms of your life insurance and whether you can keep it when you retire. You should also review any other life insurance policies to find out if they expire or if the terms change as you age. There are many different types of policies, and they can be difficult to decipher. Don't be afraid to reach out to an insurance expert if you don't understand a part of your policy.
3. How will you pay for long-term care costs?
We would all like to think that we'll stay young and active forever (or at least get to stay home!), but studies show that 7 in 10 Americans over age 65 will eventually need some type of long-term care (Source: LongTermCare.gov). Because it varies based on the level of care, the average cost of care ranges from $18,200 per year to $97,455 per year (Source: Morningstar.com). Unfortunately, it's difficult for anyone to determine the total cost of their own long-term care, so it's important to plan ahead. If you have substantial retirement assets that you want to protect from the cost of care, a long-term care insurance policy may be a good option. It can become more difficult to qualify for a policy as you age, so reviewing your options early is crucial.
4. Which Medicare option is appropriate for you?
Determining what type of Medicare policy you need can be confusing. You only turn 65 once, so you may not have any experience with the ins and outs of Medicare. If you choose a plan without enough coverage, you may end up paying more out of pocket. If you miss your enrollment window, you may even be subject to a penalty you will pay for the rest of your life. Fortunately, there are resources available to help inform you about your options. For example, the Area Agency on Aging provides unbiased educational seminars to help answer questions about Medicare. When you're ready to enroll, there are also other services that will help you compare plans and determine the best option for you.
5. Do you still have the same will and incapacity documents from when your kids were in high school?
If you had estate planning and incapacity documents drawn up earlier in your life, that's fantastic. We highly recommend having a plan in place no matter what stage of adult life you're in, but you should reevaluate it when big changes occur in your life. Reviewing beneficiaries and representatives is essential, but older documents may not include the powers your representative will need to help with long-term care issues. Furthermore, documents created in a different stage of your life may not provide the best plan for your current needs. When the time comes to review your documents, choosing an estate planning attorney with experience in elder law can help make sure you account for any unexpected events that arise.
Since retirement planning touches on many different areas, it's always a good idea to consult the right professional. Depending on your individual concerns, you may want to reach out to a financial planner or an insurance agent to assist you. If you have more questions about estate or incapacity planning, register for one of our seminars! In our free, no-obligation seminars, we address frequently asked questions about important documents and estate planning basics. We know preparing to retire seems like a lot of work, but a little preparation can go a long way to eliminate worry as you move into the next stage of your life. It's time to enjoy yourself!