Saving for Retirement: The Best Strategies

When you start working it can be difficult to fathom that one day you will be able to retire.  While it may seem that retirement is many years away, for individuals in their 50’s and 60’s retirement can be a fast approaching reality.  Ideally, people in this age group will have been preparing for retirement thought out their working years.  However, life happens, and sometimes retirement savings can be put on the back burner while other family financial needs are addressed.  The good news for those who are catching up on their retirement savings is that they have the opportunity to plan and make decisions which can contribute to their retirement goals.

People entering their 50’s and 60’s can be in a favorable position to save as they no longer have some of their significant expenses.  At these ages, many times children have moved out and are finished with college and the home may be paid off.  With these key budget items out of the way, there is significant room for savings. Taking this added income and funding a retirement savings account can be a crucial part of a retirement savings strategy.

Understanding your social security benefits is key to planning for retirement.  Drawing social security in your early 60’s is an option, but it will mean permanently sacrificing a greater benefit amount.  You can get more if you wait until your designated full retirement age or longer before drawing social security.  As you plan for retirement be knowledgeable about social security and how much you will be paid under the different options.

An important consideration is long-term care insurance.  This insurance covers personal care services in the home and in assisted living homes.  Medicare does not pay for long-term care, and the expense of these services is considerable.  While Medicaid covers long-term care, it requires the recipient to spend most of their personal assets to qualify (beyond spending your life savings on long-term care, there are many strategies for what is known as “Medicaid Planning” to allow you to protect assets – those strategies are outside the scope of this blog but are covered in other blogs and also in our Elder Care Whiteboard Videostm.  An important piece of retirement planning is preparing for your care in a way which preserves your retirement funds.

Another way in which savings can be accomplished is by reducing housing expenses by moving into a smaller home.  Depending on the market, it may be possible to profit from the sale of your home and take the revenue from the sale and put it into a retirement savings account.  Even if you may not realize a substantial profit from the sale of your home, downsizing into a smaller home could result in expenses related to the upkeep of a home that is too large for your needs, and lower utility, tax and insurance bills.  The savings on these expenses could also be used to fund your retirement savings.

For those who are still working there may be ample opportunity to save.  For instance, after the age of 50 workers are free to contribute thousands more dollars to their 401(k) than before this age.  Further, older workers may also add more to their IRA accounts.  There is also an opportunity to take stock of other retirement savings accounts which you may have accumulated over your working years.  It may be possible to combine these accounts into a single retirement savings plan.  For some, these small 401(k) plans can add up to hundreds or thousands of dollars.

It is always a good time to prepare for retirement and with informed decision-making, you can plan for a comfortable retirement. Our office has attorneys and other sources who are knowledgeable about your retirement planning options and long-term care planning, and can help you understand your choices and make informed decisions.  Please contact us online or by phone if we may be of assistance.

Post A Comment