Retirement Planning: 3 Steps that Can Help You Live Comfortably Until You’re 90

Retirement Planning: 3 Steps that Can Help You Live Comfortably Until You’re 90

The majority of the baby boomer population are entering retirement age, but they’re not ready yet. Many choose to stay in the workforce, and some of those who left are coming back. The baby boomer retirement crisis has a three-pronged cause: too little savings, exorbitant health costs, and unrealistic expectations of how much retirement income they’ll need.

Retirement is something you prepare for long beforehand. If you plan on retiring at 60, you have to think of how you’re going to support your costs of living and retain the quality of life you want for the next 30 or so years.

1. Think about the life you want after 60

Picture the kind of life you want when you retire and base your calculations on that projection. You don’t have to get into particulars; just general considerations. Do you want to stay near your family? Or would you rather stay in a senior care facility? This will help you set a realistic budget that can support you for the next 30 or so years.

For example, you may need to allocate funds for equipment if you plan on aging at home.. Tools like personal alert system, virtual assistants, and safety and protection technologies can help you live independently even as you age.

You can choose to spend your days in a senior assisted living facility if you don’t want to worry about upgrading your home. Assisted living promotes some semblance of independent living through personal care services with 24-hour security and access to a medical staff.. But this costs money. The National Center for Assisted Living estimates that the national median cost of assisted living is $48,000 per year.

2. Calculate how much you’ll need


Once you reach a certain age, you’re eligible for Medicare and Social Security benefits. But these can’t cover all of your expenses, so you still need savings in your pocket.

Fidelity Investments estimates that the average couple retiring at 65 needs $280,000 to cover their medical and health care expenses throughout retirement. Medicare can cover hospital expenses, 100 days in a skilled nursing facility, outpatient care, and prescription drugs. But it doesn’t include dental, vision, and long-term care, which includes assisted living facilities.

Although you can start cashing your Social Security benefits at 62, your monthly checks grow the longer you can delay. You can use Social Security’s estimator tool to calculate how much you can collect during retirement. You can add the figure to your other sources of retirement income, such as pension fund. Then, subtract this from the total annual income you want when you retire.

For example, you want an annual income of $60,000 in retirement. You can get $20,000 per year from Social Security and $5,000 from your pension. With your $25,000 retirement income, the remaining $35,000 will come from your pocket. You’ll need a $1,050,000 portfolio to get the $35,000 for 30 years This is a rough calculation, so it doesn’t hurt to have more than that amount.

3. Be smart about where you’ll put your money

Start saving early so you can steadily build your portfolio. Plenty of online retirement calculators allow you to determine how much you need to save per year to reach your target portfolio.

Investment funds are a good way to grow your portfolio, but you have to be careful in choosing where to put your money. Consider investing in low-cost index funds since these are easier to understand and are a safer choice than active management strategies. The goal of an actively managed fund is to constantly beat the market by putting your money in a high-performing stock. There’s a great risk for human error in stock selection, which means there’s no guarantee that your money will be in a constant uptick.

Retirement planning involves detailed calculations and informed decisions. This amount of rigorous preparation doesn’t happen overnight, so start early. And when necessary, seek the advice of a fiduciary to help manage your assets better.