3 Things to Do with Your Money to Retire Comfortably
When making your retirement plans, your goal should be to keep the same standard of living as a retiree that you now enjoy as a working professional. This, of course, is not an easy goal to achieve, especially when you consider that most Baby Boomers experience a significant drop in their standard of living after retirement.
Let’s look at some of the things that you should consider:
- Get Burial Insurance
When you get burial insurance, you are providing your family with a solution to cover all the expenses associated with your funeral.
According to PolicyZip, there are several types of burial insurance you can qualify for after a brief health history review:
Level Benefit Burial insurance will cover the full amount of your life insurance benefit because you are in good health without any pre-existing health conditions.
Graded Benefit Burial Insurance will provide coverage if have pre-existing health conditions. With this type of insurance, you will not be eligible for the full death benefit amount after approval.
Modified Benefit Burial Insurance is like Graded Benefit Burial Insurance, but with this type of coverage, your pre-existing health conditions are viewed as posing a higher risk. Consequently, you will only be eligible for a reduced payout schedule.
Finally, there is Guaranteed Issue Burial Insurance. No health questions are asked and everyone who asks for it can receive it. PolicyZip explains: “Guaranteed issue burial insurance is designed for those with pre-existing conditions that deem them uninsurable for any other type of burial policy.”
- Open an Individual Retirement Account (IRA).
If you don’t have an IRA, you should consider opening one to build your nest egg.
When choosing an IRA, you will have two main choices: A traditional IRA or a Roth IRA.
With a traditional IRA your investment earnings can grow tax-deferred until you withdraw your funds during retirement.
With a Roth IRA, you don’t have to pay taxes when you make your retirement withdrawals because this account is funded with your after-tax contributions.
Determine the best IRA for you by speaking to a financial professional who will help you evaluate your financial situation against a contribution limits chart.
- Decide on the right time.
If you love your job, you may want to retire as late as possible because you derive a sense of identity and social connection from your work. Conversely, if you dislike your job you may want to retire as early as possible so that you can start doing more of the things that you truly enjoy.
However, whether you like or dislike your work should not be the criteria you use when deciding when to retire. Instead, assess your current financial situation to make sure that you are saving and investing for a long enough time to retire comfortably. It can make a huge difference to your cash flow to work an extra year.
So, the best time to retire is when you feel confident that you know where your money is going to come from and how much you need to maintain your current standard of living.
Another thing you should consider when evaluating the best time to retire is when to claim your Social Security benefits. Although, the full retirement age for Baby boomers is 66 years, but you can claim your retirement earlier. However, your payments will be reduced if you start claiming your benefits before age 66. Moreover, you will boost your Social Security benefits if you can delay your payments up to the age of 70 years old. Delaying your retirement will increase your benefits by as much as 8%.
Following these suggestions will help you feel more confident about your retirement because you will have the money you need to live comfortably.