If retirement is in your near future, you are likely starting to plan for this next big step! Planning for retirement is no walk in the park, though. There are many "dos” and “don'ts" regarding retirement planning and safeguarding your future. Here are the dos and don'ts to ensure you are on the right track to living out a successful and achievable retirement.

Do: Save money for health insurance

Medicare is health insurance for those 65 years and older and others who qualify earlier due to disability benefits. Before you enter retirement, you will want to prepare for the cost of Medicare. Many seniors believe Medicare is free of charge and are later shocked once billed for their monthly premiums.

 Avoid being surprised by becoming familiar with your health insurance and have money saved away for your Medicare costs. If you or your spouse have worked in the U.S. for ten years (40 quarters), Part A will be $0 for you. But, if you do not have 40 quarters, you can pay as much as $499 monthly in 2022 for Part A.

The standard Part B premium is $170.10 in 2022. But, if you are in a high-income tax bracket, you will pay an income-related monthly adjustment amount (IRMAA) fee on top of your monthly Part B premiums. Therefore, you will want to prepare for these additional monthly charges.

Do: Take care of debt

If you have high-interest debt, you will want to consider paying down your debt as much as possible before hanging up your worker's hat. Although debt may not seem like a priority when entering retirement, you will want to consider your monthly payments when calculating your budget.

In retirement, you typically spend more money than you save; this is undoubtedly true for those with lingering debt. If taking care of your debt before retirement is out of the equation, you will want to investigate your options on what you can do to lower your interest rates. Before retirement, contact your service provider and see your options on interest rates or consolidating your debts.

Don't: Enter retirement without a savings

According to the Federal Reserve, seniors should have at least $426,000 in retirement savings. If you plan on living out a long retirement, you will want to have money saved away to help you financially in the years to come.

If you haven't already, you want to sit down and calculate your monthly and yearly expenses. Here are a few things to consider:

  • Mortgage/rent
  • Monthly utilities
  • Groceries
  • Gas
  • Health insurance
  • Vacation
  • Leisure
  • Holidays

There are many different costs to consider in retirement, which is why you want to plan and ensure you don't enter retirement without big enough savings.

Don't: Take Social Security for granted

Social Security benefits help provide a source of income for eligible retirees and their families! If you have worked in the U.S. and paid payroll taxes, you have not only helped fund your Part A premium, but you also helped fund your future retirement.

However, many seniors believe they can live on Social Security alone and don't need much in retirement savings. Unfortunately, this is far from true. In 2022, the average monthly Social Security check is $1,542.22. As you can tell, this is likely not enough money to live off for an entire month.

With that said, you should also note that if you draw Social Security before age 70, you will not get your maximum Social Security benefit. Although you can draw Social Security as early as age 62, you will reduce your overall benefit whenever you withdraw from Social Security before age 70.

Final point

It's never too early to start a retirement plan, as there are many "dos" and "don'ts" you want to be aware of. You don't have to go at this alone, though. Reach out to a reputable financial advisor, Social Security expert, and Medicare expert to be sure you are on the right path to a safeguarded future!

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