It’s a very unsure feeling world, and making preparations for the future during pandemic times can seem strange at best. But it’s critical to continue (or begin) to prepare for retirement. It can be difficult to visualize what things are going to be the largest expenditures in the future, and what might be needed in order to make preparations. You can do this, if you know what to do to plan ahead.
Housing Expenses
In retirement, as now, your housing will be one of your largest expenses. It is best if you can prepare ahead to be able to purchase a home and pay off the mortgage prior to retirement, in order to prevent this expense from expanding over time. Buying real estate is a primary way to build wealth, and owning your own home free and clear is a large part of that eventual retirement plan. If you are capable of buying a suitable house and paying off your loan over time, it is a great way to diminish one of your largest retirement expenses. This does not need to be a large house, or the fanciest neighborhood, but an investment for your future. Even with a mortgage repaid, you must also prepare for repairs and needed household expenses as well.
Healthcare Expenses
Unfortunately, many institutions estimate that even with Medicare, you will need to pay 50-80% of your current annual healthcare costs after retirement. There are multiple Medicare plans to choose from depending on your budget and insurance needs. It’s important to research and figure out which is right for your family. As bodies age, they need more care and maintenance, and healthcare costs still are rising exponentially. Being able to prepare ahead for needed expenditures, surgeries, and eventual home healthcare costs is an important part of retirement preparation.
Taxes
The certainty of taxes follows each individual into retirement. Social Security is taxable at up to 85% of the benefit. 401K and IRA accounts are also taxable. There are, however, simple calculators for estimating what income and taxes might be needed for retirement income. This can help you prepare ahead for such major expenditures, in order to know what you need to save. Not being caught by surprise by taxes when you need money for healthcare or other expenditures from your IRA account is an important part of your preparation.
Preparing ahead for retirement can seem overwhelming, but it doesn’t need to be! There are many capable financial advisors and experts who can help you make sure that you are on track for all of your goals. Once the large expenses are taken care of, you will be able to breathe a bit easier, knowing that your retirement is secure and your family is protected.
For more tips on how to plan for your retirement, read this book!
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