Retirement is something that can sneak up on you. Before you know it, you’re confronted with financial, healthcare, and life choices that you’re responsible to take care of as soon as possible.
This can be overwhelming, especially when you’re going through such a drastic change in your life. Why not prepare for these responsibilities beforehand? Being prepared for retirement surprises you may face helps you to confront it with a positive attitude. This also helps you to benefit from your retirement as much as you can!
All Your Medical Costs Aren’t Covered
When you retire, you’re at an age where you experience more health issues than usual. You find you get sick more often, you experience more aches and pains, and more serious health issues can turn terminal if they’re not treated.
Most companies offer a health plan while you’re working for them, but once you’re retired, you can no longer rely on this health care. This makes it crucial for you to plan how you’ll manage your medical costs after retirement.
Registering for Medicare
Every 65-year-old should enroll in Medicare. The best time to apply for it is a few months before you turn 65, because you’re only allowed to become a member of Medicare once you’re exactly 65.
If you’re earning social security, then you’ll automatically be enrolled in Medicare. But, you should ensure that you have the right package that you want. There’s an original option and a premium option that requires you to pay a monthly fee.
Downsides of Medicare
Although Medicare is extremely necessary for every 65-year-old, there are some downsides to it that you need to be aware of. There’s a lot of benefits to using Medicare, but one of its biggest downfalls is that it doesn’t cover all of your medical costs.
Unfortunately, Medicare doesn’t cover expenses such as dental care, prescription drugs, and hearing and vision care. Some health care providers don’t accept Medicare. This makes it crucial for you to do your research about your Medicare plan and where it’s accepted, so you can benefit the most from it.
Taxes Doesn’t Disappear
The benefit of being a retiree is that you get tax breaks! You can get huge discounts off your tax returns, and some states don’t charge you tax for any of your retirement income. However, your tax doesn’t entirely disappear.
Something that may blindside you is the tax that you have to pay for social security benefits. Up to 85% of your social security benefits can be taxed. But, on a more positive note, a Roth IRA or 401(k) is tax free!
Half Years Are Important
Did you know that half years are considered for two important milestones that impact your retirement? You need to be aware of these milestones and what to do when you reach them, so you don’t receive penalties that set you back financially.
Withdrawing Your Nest Eggs
Your next egg is the money that’s saved for your retirement, which is either an IRA or 401(k). Once you turn 59 1/2 you’re able to withdraw from your nest egg with no penalties. There’s a legal regulation for you to withdraw money from your nest egg by the time you are 72. If you fail to do this, you can be faced with a hefty penalty.
Gaining Financial Freedom
When you retire you want to optimize your financial opportunities, and this can be achieved by knowing how to achieve the most benefits and interest. Once you’re aware of this, you’re able to achieve financial freedom once retiring from your company.
Don’t Take Out Your Social Security Too Soon
Yes, you are able to withdraw from your social security during your early sixties, and many people turn to their social security before they turn 70. However, waiting longer provides you with more benefits!
You’re allowed to wait up till you’re 70 years old to take out your social security, and this provides you with maximum benefits. But, if you find yourself struggling financially, you always have access to it, from the age of 62.
Let’s be real. You want to retire with a substantial amount of money that gets you through life. Consider how much you need to retire comfortably and work toward growing your invested money to that amount. Stay consistent, responsible, and only withdraw money if it’s absolutely necessary.
Being Resourceful Is Crucial
Even if you’re lucky enough to optimize the finances of your retirement, you still need to learn resourcefulness. This is one of the most important skills to have as a retiree. You want to stretch your money efficiently, so you can enjoy it!
Just because you’re no longer employed and earning a salary doesn’t mean you should budget any less. In fact, this is a time in your life where you should budget more! Budgeting monthly helps you to get your finances in order, and this helps you to maintain a lifestyle that makes you feel fulfilled.
Although you’re no longer putting money into your 401(k) or IRA, this shouldn’t stop you from saving by yourself. You can open a savings account with your bank, if you don't already have one, and proceed to save on a monthly basis. You can even transfer all the money from your nest egg and withdraw a specific amount monthly.
Having access to a huge lump sum of money can be tempting and overwhelming but remember to keep money saved for a rainy day. Don’t spend all your money on senior discounts that are often too good to be true.
Retirement doesn’t have to be as stressful or overwhelming as it often is. Understand what is expected of you during this time, and how you can make the most of your financial opportunities. Once you do further research on retirement surprises you may face, you’ll be prepared for that phase of your life!
Written by Matthew Delaney