If you are starting to think about retirement and feeling overwhelmed you are not alone. There are many things to consider before you jump into retirement, especially from a financial stand point. One great online retirement resource is My Retirement Paycheck, hosted by the National Endowment for Financial Education. The website offers calculators and a host of other resources that explore eight topics that can have a major impact on retirement decisions. The categories covered include home and mortgage, insurance, pension, debt, fraud, retirement assets, social security and work. The website is broken into sections and major issues in each category are explained in easy to understand language.
The website gives examples of decisions that affect retirement issues, such as delaying retirement and continuing to work for two or three years. A decision like this could allow someone to put off taking social security, and each year of delay from the ages of 62 to 70 will raise retirement benefits by nearly eight percent a year.
The National Endowment for Financial Education created the online retirement resource to offer basic retirement facts, and the site is not designed to model sophisticated retirement model scenarios, however, the simple calculators are easy and straightforward to use and are a great starting point for those who are just starting to think about retirement options.
“The intention of this site is to have a place to begin an enhanced conversation about how people might manage the retirement income process,” said Brent Neiser, the director of strategic planning and alliances for the Endowment. “It is designed to get spouses and loved ones together, to think about these issues. “It might even be a good thing to use to work with a financial adviser.”
One of the main reasons the site was developed is to help people think about creating a retirement plan that will generate regular income to help cover living expenses and a regular flow of income during retirement years.
“It helps people to think about the right questions to ask,” Neiser says, “and to understand the linkages between most retirement decisions.”
The site, however, does not try to generate pecific retirement income numbers. This is because each retirement is so individual, and trying to lump them all together would not be beneficial to most users.
“We purposefully did not design this to come up with a number,” Neiser said. “Providing such interactive tools might be available in the future. But NEFE’s expert advisers were concerned that consumers who have not saved enough or built solid retirement plans — and that describes most Americans — would be discouraged if a quantitative tool told them they needed to build nest eggs that seemed unrealistically large.”
Here are the Endowment’s biggest “take away” advice for their eight retirement topics:
To maintain a steady cash flow during retirement, pay off as much consumer debt, including credit cards, as possible before retiring. Additionally, borrowing money during retirement is not advised unless there is a very specific plan for how to pay it back. Try to start paying off debt around ten years before retiring.
Your retirement assets have been hard earned. Protect them. Scammers often target older Americans with misleading advertisitng, marketing and fraud. Don’t ever make a financial decision quickly or over the phone. If it sounds too good to be true it probably is. If you are in doubt, always ask someone you trust for a second opinion.
Home and Mortgage
It’s true that your home is your biggest asset, but be careful when thinking of it as your retirement plan. The housing market fluctuates which means you should have other forms of savings. It’s okay to view the equity of your home as an assett…but you should have other sources as well. Insurance.
Having a plan to pay for medical and long term care needs is crucial. A good place to start is a fixed annuity. These funds can help give you a regular source of income during retirement to help pay for things like health care costs.
An employer pension is an annuity that provides a stable paycheck during retirement. Pensions are a great way to protect against inflation and ensure a stable income during retirement years.
Even during retirement you need to continue to make wise investments. People are living longer than they used to, and it’s important to realize that retirement funds must continue to support the longer length of life. Most retirees should still be investing in diversified assets during their golden years.
The site generally advised waiting as long as possible to start drawing social security. Taking it too early means you’ll receive less each month. Your benefit will be about twenty-five to thirty percent higher if you wait until your full retirement age.
If you are generally healthy, it’s advisable to work until at least your full retirement age. This provides many benefits, including things like prolonging your health care coverage, increasing your retirement assets and helping provide the monetary resources to pay off debt before full retirement.
For more information on retirement decisions, including how to choose a retirement destination, follow this link.