8 Tips for a Better Retirement
1. Think about what you’ll do after retiring.
Today’s average age of retirement is 62. Remaining life expectancy at age 62 is over 23 years.
Give some serious thought to how you will spend your retirement years. Visualize your first day of retirement, and then six months, then a year in and then the years after that. Think about how you want to spend that time and have a rough plan that allows for financial wiggle room.
2. Get your priorities right.
Which is more important, retirement funding or college funding? Most parents want their children to do well and make sacrifices for them. However, if it comes to a choice between saving for retirement and saving for college, retirement should be your first obligation.
3. In two-income families, save the income of the lower-earning spouse.
Saving too little and spending too much is by far the biggest problem people have when preparing for retirement. It is common for many couples today to both have incomes. One of the best ways for these dual-income couples to save more is to live on the income of the higher paid spouse and save the income of the lower-paid spouse.
4. Delay taking Social Security income.
Filing for Social Security before full retirement age can reduce your benefit by up to 25%. Waiting until you have passed full retirement age (up to age 70) to file can increase your benefit by as much as 32%! While decisions about when to begin taking Social Security will depend on individual circumstances, if you have the ability to delay and are in good health, delaying can work to your advantage (and to that of your spouse).
5. Get a financial advisor.
Three times as many retirees without an advisor say health-care costs are preventing them from doing what they want in retirement. Additionally, retirees working with a financial advisor are more likely to say they are able to do the things they want in retirement than those who are not working with an advisor. Find one who is fee-only and has the appropriate qualifications, such as a CFP®️ designation. Working with a CERTIFIED FINANCIAL PLANNER professional assures that (s)he is a credentialed expert who is held to high ethical and professional standards.
6. Review your insurance policies.
After a certain age – when the kids are grown, the house is paid off, and the retirement income plan is in place – the need for life insurance usually diminishes. However, this is the time to determine whether you want or need long-term care insurance or health insurance.
7. Update your estate plans.
Check your wills, trusts and other legal papers to make sure they are up-to-date. Your estate plan should be reviewed after any major family events or every 5 years, whichever comes first. You should also conduct an annual beneficiary review of all retirement and trust accounts (IRA, 401(k), etc.) to ensure that you have named the proper people.
8. Beyond wills and trusts.
Most families we meet have only one person, usually the husband or wife, in charge of managing the family’s finances. If that person is incapacitated or dies, the spouse is often thrown into a panic because they aren’t familiar with bill-paying, online passwords, or even where the family’s money is and how it’s invested.
At the very least, take note of the steps you take in managing the family finances and write them down somewhere. Include any other information that might help your spouse and heirs in the event you can no longer manage it yourself. Then store it somewhere safe and let a trusted loved one know how to access it if something should happen to you. It will truly help save them from a lot of additional stress and grief when they most need comfort.