If you’re nearing retirement, it’s time to ask yourself some serious questions. Specifically, are you going to wear sweatpants all the time, no matter the occasion? And what are your feelings toward daily pina coladas? Once you’re done with those, perhaps try some actual serious questions. Below are some you should be able to answer.
How Much Money Do You Need to Cover Living Expenses?
It’s essential that you try to get ahold of how much money you’ll need to account for everyday living. This category should include things like utility and phone bills, health insurance and non-reimbursable healthcare expenses, groceries, entertainment and mortgage or rent payments (if you still have them). Don’t forget to account for inflation. As USA Today reports, while it’s tough to know exactly how much inflation will be, a good ballpark figure is roughly three percent each year. Having trouble doing the math? Search out a good retirement calculator.
How Long Will Your Savings Last?
Once you have your living expenses figured out, it’s time to see if your retirement savings are going to last. That means you need to know how long you’re expected to live. Grim, we know. But necessary! The average 65-year-old man today is expected to live to 84, while the average 65-year-old woman is expected to live until 87. Make sure you have enough savings, minus living expenses, to make it past that number by a good five years. If you don’t, it’s time to cut expenses and increase deposits to your savings account.
How Can You Max Out Social Security?
If you can, wait until 66 or 67 to retire, that way you’re maxing out your Social Security payments. For every month you delay taking checks, your payment increases by ⅔ of one percent — or, about 8 percent a year. Review your options before deciding when to start accepting payments. If you’re part of a couple, perhaps something that would make sense is for the lower earner to start payments at 62, while the higher earner waits until 66 or 67. The important thing is to have a solid strategy in place, so that retirement is easier on you.