With the upheaval in the American pension and medical insurance programs that have dominated the news in the last few years, wondering whether you can still retire at the age of 65 like many of our parents is a legitimate concern. Already, the national retirement age is 65 years old only for those born in or before 1937. For those born after, the Full Retirement Age (FRA) gradually increases with the year of birth, with the latest FRA being 67 for those born in or after 1960. If you are determined to retire at the age of 65 regardless of your birth date, you need to make a retirement plan that will provide you with enough financial resources to live comfortably with less help from the government than you might have were you to wait a few more years. What can you do to make sure you will be able to retire at 65?
Make a budget.
Your retirement benefits from your employer and the government increase with every year you work. To guarantee that you will receive enough money in benefits or that you will have enough money saved in other investments to retire in style, your first step must be to clearly quantify your expenses. Grab your most recent tax statements to get a good idea of what you have been spending and how. List your expenses in two categories – essential and nonessential. Try to be realistic with these groupings. You can include the cost of your favorite newspaper subscription in the essential category if reading it is really part of your daily routine, but maybe not if it is simply a coffee table coaster. Make sure to estimate the cost of your health care as well, erring on the side of reserving more for unexpected circumstances that you couldn’t possibly foresee today. Luckily, Medicare is still available for anyone 65 and older and could be a good source of primary or additional health insurance during your retirement.
Have a plan.
After you understand how much money you will need annually to live comfortably, you should begin to add up all the different sources of income you expect to have during retirement. Calculate how much annual income your employer’s 401(k) retirement plan will offer you and how much your Individual Retirement Account (IRA) will provide you. Don’t forget to include any income from rental properties and other sorts of similar investments. If you have any stocks, bonds, CDs, or special savings accounts that you plan on cashing in on during your retirement, incorporate them into your plan. Look into investment capitalization schemes to make even more money on your investments by investigating options like covered calls through companies like Compound Stock Earnings. If you are still worried about meeting your budgetary needs, consider the option of having a relaxed part-time job during your retirement to earn a bit of extra income and keep yourself busy. Overestimate your needs to make sure you are covered after you have permanently left your job and primary source of income.
If your economic necessities significantly overshadow your projected income during your retirement, consider other options. If you push back your retirement a couple of years, you will earn more through your employer’s retirement plan, your IRA, and the government’s social security scheme. You will also have a bit more time to better predict your actual situation at retirement time, allowing you to better plan and distribute your retirement resources. If you are determined to retire at 65 but see no real way of making that happen given your financial situation, consider retiring abroad. This option has become increasingly popular and expat communities in countries like Costa Rica are growing. Retiring abroad can save you thousands of dollars per year, allowing retirees to maintain and sometimes even better their standard of living during their retirement. Think outside of the box for retirement options that allow you to meet all your needs and live comfortably.
If you begin planning early enough, there is no reason you should not be able to retire at the age and in the manner you prefer. Examine your budget and finances to understand your situation, be flexible to make all of these elements fit together, and allow yourself to retire comfortably at the age 65. For more tips, see Money Over 55.