A Guideline for Retirement Planning

Retirement savings can come from many sources: IRAs (both traditional and Roth), 401(k) accounts, SIMPLE IRAs, pensions, profit-sharing plans, employee stock ownership plans (ESOPs), and others. Take a good look at how much you have in your accounts and determine if you will incur a penalty or will need to pay taxes when you begin drawing from them.

You should also assess your home, investments, and non-retirement savings, so you know all the assets that may be available once you retire.

Social Security provides another source of income for retirees, but the program has rules on when you can collect and how much you’ll receive. You can start drawing Social Security as early as age 62. If you wait until you reach full retirement age to start collecting (as late as age 70, depending on when you were born), you’ll receive more money each month.

What you'll need to decide is whether you should start drawing sooner and receive less money in the long term, or do you go without the additional income now for more stability later on? Determining the answer to that question isn’t easy, but careful retirement planning can help.

Most people can enroll in Medicare at age 65, but it doesn’t cover everything. For example, long-term care and most dental procedures are not covered. Medicare A covers hospital stays and inpatient treatment and it’s free for most Americans. Medicare B covers preventative medicine and doctor visits, but it generally isn’t free.

Although Medicare A decreases medical costs for retirees, many people realize that they also need Medicare B, private supplemental insurance, or some combination that covers everything else. Depending on when you retire and your overall health, you could easily live 20 years or more after retirement, so thinking about your insurance needs now can provide some peace of mind later.

Retirement shouldn’t be so much of an ending as it is the beginning of a new adventure. What you want that adventure to be will shape your financial plans. Do you want to work part time even after you retire? Travel? Volunteer? Golf every day? Or simply relax and enjoy the easy life? So many options are available and you don’t have to pick just one.

However, you do need to consider how much your retirement vision might cost. Exploring the country in an RV is a great idea, but you don’t want to find out after you retire that you can’t afford to buy a big camper or the gas needed to travel the United States.

Retirement planning shouldn’t be difficult, but there is so much to think about. Once you sort through your retirement accounts, Social Security, Medicare options, and your post-retirement goals, you can create a broad plan. Again, you need to think ahead a couple decades, which is why a good plan is so important.

All of this may seem a little overwhelming, but you don’t need to figure it out on your own. Contact our financial advisor at 1st United through Osaic Institutions, Inc. Rahil is available to help you plan your financial future so you can focus on the adventures ahead.

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