By Charlestien Harris
Well, it’s about to be official! I’ll be turning 65 on my upcoming birthday – yay for me! I like to call myself a “seasoned citizen” instead of a senior citizen, mostly because it just sounds better. But there are some very important financial moves you need to consider when you reach your 60s, or beyond.
The financial decisions you make at this point in your life can mean the difference between just surviving or thriving during your later years. What some of us don’t realize is that moving from a working income to a retirement income can be a significant adjustment. Let’s take a look at a few ideas that might help you make the most of your retirement income. If you’ve already retired, you may want to make some adjustments to your previous decisions to smooth the transition.
- Make the most of your remaining earning years. You’ve planned, dreamed, and talked about retiring for decades, and now it’s in sight. Make a big push to maximize your 401(k) contributions with your employer. Try boosting your savings as much as possible by opening an IRA account. IRAs offer tax advantages for retirement savings, and saving in both Roth and Traditional IRAs will give you options when managing your retirement funds. I plan to work a little longer to boost my Social Security and increase my contributions to my 401(k) and other investment accounts.
- Don’t forget to sign up for Medicare! The traditional sign-up period is three months before your 65th birthday and three months after. Other sign-up options are available, so make sure you don’t miss out, as you could be assessed a penalty for missing the deadline. Depending on your situation, you may be automatically enrolled in Medicare. For example, those who have already begun taking Social Security benefits are automatically enrolled in Medicare Part A and B. With so many options available, you might still decide to sign up for the Part D drug plan, buy a Medigap supplemental policy, or switch to a Medicare Advantage plan. Be sure to research your options and decide what’s best for you.
- Think about the “what ifs.” Having a well-thought-out plan can help you start your retirement years on a solid foundation. Don’t let unexpected events derail your financial goals during retirement. Ensure you’re financially stable by establishing an emergency fund and purchasing the right kind of insurance. If you’re an investor in the stock market, you should also create an investment strategy designed to withstand the market’s ups and downs.
- Get your finances in order. Get to know your retirement income sources. Organize your finances so you understand what you’ll have to live on. Review your retirement accounts, such as your 401(k) and IRA, to ensure you’re on track. Consider all your income streams to develop a budget and a savings strategy. Wind down gently – retire in stages to ensure a smoother transition from a working income to a retirement income. Consider tax-smart strategies before you retire. While you’re still saving for retirement, it’s important to prepare for the taxes you’ll pay once you reach retirement. Be sure to keep a close eye on your expenses. You don’t want them to get out of control or exceed your retirement budget.
- Use a retirement checklist. You’ve no doubt planned, dreamed, and talked about retiring for decades, and now it’s in sight. A retirement checklist can help you plan ahead and outline your vision for retirement. If retirement is coming into view, it may be time to kick your planning into high gear. A checklist can help you plan for things like Social Security, healthcare costs, and transitioning from saving to spending. Outline your vision for retirement and develop a strategy to achieve it. Review your debt and consider whether there is something you should pay down now rather than carry into retirement.
Even if retirement is several years away, now is a good time to start thinking about the steps you’ll take when it’s time to live off your savings. Taking the above steps toward the retirement you want while you’re still working can help you identify shortfalls and make adjustments before it’s too late.
For more information on this and other financial topics, you can email me at Charlestien.Harris@banksouthern.com or call me at 662-624-5776. You can also visit www.banksouthern.com/blog.
Until next week – stay financially fit!