Imagine this. You’re 10 years away from retirement. You’re already planning a vacation or two and dreaming of all the time you could spend doing nothing. Even now, you could just relax and slow things down.
Not so fast though. Experts suggest that now is actually the time to focus on the retirement planning process.
The said process entails budgeting for future expenses. It’s a given to save money for daily expenses such as food, housing, renovations, and travel. Yet, overlooking long-term care costs is not only fairly common but it’s also a very foolish mistake to make.
Experts warned that Medicare won’t cover all health care expenses in retirement. In fact, an average retiree spends over $4,000 each year on out-of-the-pocket medical costs alone. As such, retirees would still need to pay for premiums, deductibles, copays, and coinsurance even with Medicare coverage. Moreover, the original Medicare doesn’t cover dental, vision, and prescription drugs. For comprehensive coverage, enrolling in a separate plan (Medicare Advantage Plan or Medicare Part D) is advised.
Aside from budgeting for long-term care, soon-to-be retirees should also consider double-checking their retirement goals. They should also decide at what age they want to claim their Social Security benefits.
It’s imperative to have clear retirement goals as you approach the senior years. Figuring out how much you should save by the time of retirement is just one side of the work. You also need to consider the amount you expect to fork out yearly and the number of years you’ll spend in retirement. Doing so would result in accurate and achievable saving goals.
As for Social Security benefits, it’s important to note that the size of monthly checks would depend on what age you’ll begin making claims.
For instance, claiming as early as the age of 62 means that your monthly checks would be reduced by up to 30% if your full retirement age (FRA) is 67. Claiming past the FRA would, of course, result in bigger checks — those with an FRA of 67 and claim benefits at 70 will receive the full amount plus a 24% bonus.