Retirement Savings Won’t Save Itself: How to Know if You Have Enough

No one said it was going to be easy, but what if you’ve made it all the way to your early 60’s and you start worrying about your retirement savings? Have you really saved enough, and if not, what can you do now? Retirement can be a challenge at any age, but if you are in your early to mid-60’s it can be especially scary. Here is how to ensure you are secure through your golden years.

A Quick Run-Down of Facts

• If you were born in 1960 or later, your full retirement age to start collecting Social Security is 67.
• You can sign up for medicare at 65.

Steps to Grow Retirement Savings

It’s true, at one time the common age of retirement was 65 but times have changed. From the  new age of receiving full Social Security benefits to the scarcity of pension plans, what retirement looks like has  morphed considerably in recent years. Additionally, even if you are financially secure, 65 doesn’t always mean the time to retire. Many people love their jobs and want to keep working into their later 60’s. Still, there are a few things to consider when it comes to your retirement savings.

Determine Your Retirement Readiness

Don’t know if you’re ready to retire? No time like the present. Here are a few key considerations when determining if you are ready to retire:

How much will you need?

This will depend on how much you plan to spend. The general rule is that you will need about 80% of your pre retirement income when you leave your job. The reason for this percentage is that researchers assume you will no longer be paying into Social Security. 

How Long Will You Need It to Stretch

No one likes to think about it, and no one really knows how long they will need their money to last, so it is best to err on the side of caution. But, there are a few basic numbers you can consider. On average, men will live to 83 and women will live to 85. That means having savings that will last you 18-20 years.

Create a Retirement Budget

If you’re  reading this article, running out of money is likely a concern. That’s where a retirement budget comes in. How you spend it and where you make adjustments will help you prepare for the occasional surprise, like medical expenses or home repair. Taking the time to make a budget will help to put your mind at ease in retirement.

• Gather Financial Records: Grab your checkbook, credit card statements, and other expense documents to calculate your yearly expenses.
• Make a List of Monthly Expenses: Make a list of your monthly fixed expenses which could include mortgage, car payments, and anything else that gets billed every month.
• List Monthly Variable Payments: These are payments that don’t get billed at regular prices like grocery bills, pet fees, gas, and entertainment.
• Factor in Non-Recurring Expenses: These are expenditures  like vacation funds or buying a new car. List special expenses that require advanced planning.
• Estimate Your Retirement Income: Add up your monthly income from all sources. Most retirees will start with Social Security, pensions, and 401K.
• Compare Total Expenses to Your Income: This will tell you how much monthly wiggle room you will have.
• Check Your Budget Periodically: Just to make sure you are still on track.

Decide When to Take Social Security

While there is no exact “correct” time to claim your benefits, the common approach is that if you can afford to wait, delaying Social Security can really pay off. Here are some guidelines for your benefits:

• Taking Social Security Early: If you choose to receive benefits early, you can receive checks up to 36 months before full retirement age. But, be aware that this will permanently reduce your future benefits.
• Delaying Your Benefits: If you choose to retire later and wait until 70, you will earn a delayed retirement credit (DRC). This grants you a higher baseline for your Social Security benefits.

Fortunately, if you are moving to a senior lifestyle community, many of your expenses can be rolled into one easy payment every month. To learn more about community fees, check out this article. 

Planning your retirement is a tricky business, so make sure you learn the 6 Money Planning Tips for Your Senior Living with this FREE eBook!

Life Enriching Communities, Inc. (LEC), is an integrated family of lifestyle communities and senior living services in greater Cincinnati. Best known for our Twin Towers and Twin Lakes senior living communities, we have made aging well a top priority for nearly 120 years.