I recently attended a retirement refresh webinar. The information was very informative and gave different thoughts and plans to consider before retiring and also for those who have already retired. When I retired almost four years ago, I implemented a plan. I calculated and recalculated how much it would take to live in retirement, especially since my husband retired 11 years ago. I created a plan before retirement. Some of the decisions I considered were current expenses - bills, life insurance, health insurance, pension, 401K plan, and taxes. This may seem like a lot, but you have to consider everything. Most people will retire with social security. If that is the case, you need to determine how much social security will pay if you retire early at age 62 or later at full retirement age 70. Before my retirement, I attended several webinars and seminars to gather more information to make decisions before retirement. Everyone’s situation is different. These webinars/workshops were beneficial and I was able to take away several nuggets from each of them. Let’s take a look at some of these discussions.
First, let’s talk about having a plan before retirement. You may be five years out or ten years before you retire. If you are expecting to retire within those timeframes, review your debts and have a plan to pay them off. The fewer debts you have going into retirement, the better, especially when your income decreases. Think about it: if you are working now, you get 100% of your income. When you retire, your income decreases drastically. It would help if you retired with less expenses as possible. Review your expenses/bills, make a plan to pay off credit cards, continue creating an emergency saving plan, and increase your 401K contributions. All of these are just suggestions. Habakkuk 2:2 (KJV) “And the Lord answered me, and said, write the vision, and make it plain upon tables, that he may run that readeth it.” Write down your ten year and 5-year plan before you retire even if you change your mind and decide to work a little longer.
If you expect to receive social security, you may already know that social security payments are insufficient to retire on. According to SSA website, you may receive 40% of your pre-retirement income from social security. Some people who receive only social security have to get another job while retired. You must have at least 40 credits/quarters or 10 years of work to be eligible for social security. If your expenses include home, credit cards, and car, and you retire at the age of 62, social security may not be enough to cover your expenses. The average social security payment is $1,543 at age 62 or $3,148 at age 65. With this said, it is best to have another source of income during retirement. The Social Security website is available for you to determine how much you will receive in Social Security if you are getting close to age 62. Go to ssa.gov website to get an estimate of your benefits.
Since social security may not be enough in retirement, having another source of income is crucial. If you are on a job that offers a retirement plan such as 401k, it is in your best interest to contribute to it. If your job matches your contribution, please make it a point to contribute to it. Each job/employment have different rules, so find out how much you can contribute. If you start early on your job, continue to contribute as much as you can. If your employer has a catch-up plan when you turn 50, contribute to it as well. If your employer does not have a retirement plan, my suggestion is to contact a financial advisor to set up a retirement plan.
Retirement should be funded before college savings. You cannot get a grant or scholarship for retirement. However, you can take control and contribute funds to your retirement, and no one else can do it for you. It is important to think about this early in life. Don’t procrastinate; put as much as you can towards retirement. Save like the ant in Proverbs 6:6-8 and store up funds for your retirement. You deserve to enjoy retirement!!!!!
Grace & peace,
Meliton Barron
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