Retiring Takes Effort
The first things that come to mind when thinking about retirement may be rest and relaxation, but before you reach that point, you need a financial strategy that can support your post-career plans.
A recent study found many current retirees are worried about just making day-to-day expenses:1
- The median annual income for married retirees is $48,000; $19,000 for singles
- 25% of today’s retirees are still paying off credit card debt
- 60% retired sooner than expected, typically due to downsizing or other employment-related reasons or health issues
Even if you are sufficiently prepared for retirement, it’s good to establish a budget and stick to it. The Employee Benefit Research Institute recently found that nearly half of households spend more money in the first two years of retirement than they did while they were still employed.2
It’s important to recognize that retirement is much like your career — you get out of it what you put into it. That goes for both your finances and your enjoyment. Being financially prepared for retirement means more than just having enough income, you also need to plan for unexpected expenses, potentially large health care bills and the possibility of long-term care.3
We’re here to help you create a financial strategy to help you feel confident that these types of expenses won’t prevent you from living your preferred retirement lifestyle.
But let’s talk about something other than financial preparedness for just a moment. Keeping in mind that people live longer — but not necessarily healthier — lives these days, have you thought about what you’ll do on a day-to-day basis during retirement? Without a “lifestyle plan,” many retirees sink into a state of isolation, lack of mobility and bad habits.
Some people think, “I’m doing nothing but playing golf when I retire” — an admirable goal indeed. But if you eventually grow tired of walking the course five to seven days a week, it’s good to have fallback options to fill your schedule. Here’s a possible idea: Most community colleges offer courses for retirees, so why not go back to school and study something you’ve always been interested in? Not only will you engage your mind, you’re likely to meet other retirees who share your interests. Maybe team up and start an “encore career.”4
In Australia, a nonprofit organization started an initiative called the “Men’s Shed,” a place where retired men show up every day to drink coffee, debate the issues and work on community projects.5
There are plenty of occupations and hobbies out there that let you work on what you enjoy, without the constraints of working 40 hours a week. Whether you’re already retired or getting ready for it, just remember that what you put into retirement is often what you’ll get out of it.
Content prepared by Kara Stefan Communications.
1 Transamerica Center for Retirement Studies. April 2016. “The Current State of Retirement: A Compendium of Findings about American Retirees.” http://www.transamericacenter.org/docs/default-source/retirees-survey/tcrs2016_sr_retiree_compendium.pdf. Accessed Sept. 29, 2016.
2 Tanisha A. Sykes. USA Today. Sept. 28, 2016. “More free time could mean risky spending for new retirees.” http://www.usatoday.com/story/money/personalfinance/2016/09/28/spending-overspending-new-retirees-free-time/90498760/. Accessed Sept. 29, 2016.
3 Emily Zulz. ThinkAdvisor. Oct. 3, 2016. “Morningstar’s ‘Must-Know’ Stats About Long-Term Care.” http://www.thinkadvisor.com/2016/10/03/morningstars-must-know-stats-about-long-term-care. Accessed Oct. 11, 2016.
4 Knowledge@Wharton. Jan. 14, 2016. “The Retirement Problem: What Will You Do with All That Time?” http://knowledge.wharton.upenn.edu/article/the-retirement-problem-what-will-you-do-with-all-that-time/. Accessed Sept. 29, 2016.
5 Gavin Fisher. CBC News. March 17, 2016. “Kelowna’s ‘Men’s Shed’ replaces isolation with purpose in retirement.” http://www.cbc.ca/news/canada/british-columbia/kelowna-s-men-s-shed-replaces-isolation-with-purpose-in-retirement-1.3496600. Accessed Sept. 29, 2016.
Legacy Planning Tip: POD
Not all wealth is distributed according to a will. Life insurance, annuities, pensions, IRAs and 401(k)s are distributed according to the beneficiary designation assigned in your contract or policy.11
Another way to transfer assets is to assign a beneficiary through a payable on death (POD) account designation. Some states allow bank account owners to assign their beneficiaries to inherit accounts without having to go through probate.12
This includes checking and savings accounts, certificates of deposit and money market accounts, insurance contracts and investments. It’s easy, there are no fund limits and you own the assets and have full access to them until you pass away. Once you die, your beneficiary will need to provide the bank his or her identification, a certified copy of the death certificate, and any additional paperwork required by the institution or insurance carrier.13
12 Mary Randolph. Nolo.com. 2016. “Payable-on-Death (POD) Accounts: The Basics.” https://www.nolo.com/legal-encyclopedia/free-books/avoid-probate-book/chapter1-1.html. Accessed Sept. 22, 2016.