Key Points
Retirees often worry that they'll run out of money.
The cost of health care is often a key source of concern.
Many Americans hope to leave assets behind to loved ones.
- The $23,760 Social Security bonus most retirees completely overlook ›
For many seniors, retirement sounds like paradise, but it's not always as carefree as they hoped it would be. For one thing, the financial reality of retirement can be more intense than expected, leading an older adult to worry about what else might be around the corner. For example:
1. Outliving their money
Even after doing as much as possible to contribute to your retirement plan and claiming Social Security, it can be scary to think about living for decades without freshly earned income. To help ease the fear of outliving your money, take the following steps:
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- Create a detailed monthly budget: Tracking income and expenses to better understand your financial needs is a good way to regain control.
- Work with a financial planner: You're never too old to check in with a retirement or financial planner. Even if it's just once every year or so, it's good to gain a professional's insights.
- Consider part-time work: If you find yourself worrying about money too often and you're healthy enough, consider finding a part-time job you would enjoy. Not only will it take your mind off your worries, but it will also provide you with a little extra money.
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2. Covering the high cost of healthcare
While some still believe Medicare will cover all expenses in retirement, retirees know better. Simply put, healthcare costs in retirement may be one of your largest expenses. If paying for it is one of your largest concerns, consider the following:
- Watch your calendar: Enroll in Medicare Parts A, B, and D at the right time to avoid a lifelong enrollment penalty.
- Review your Medicare plan: Conduct an annual review to ensure you're still getting the most bang for your buck. If not, take the opportunity to change your plan during the annual enrollment period.
- Buy supplemental insurance: Maintain dental, vision, and hearing coverage since Original Medicare does not cover these important services.
- Pour money into an HSA: If you have a high-deductible insurance plan, contribute as much as possible to a health savings account (HSA). Funds in an HSA can grow tax-free for years and be used to cover healthcare expenses in retirement.
- Pay less for prescriptions: To save money on prescription drugs, opt for generics when possible, compare prices across pharmacies, investigate mail-order options, and take advantage of patient assistance programs and manufacturer coupons.
3. Leaving a legacy
For many older Americans, estate planning is a concern, particularly how to leave their assets to loved ones. If that sounds like you, you may want to:
- Create or update wills and trusts: A qualified estate attorney can help you create the legal framework you need to get assets to the people and causes you care about.
- Make sure the problem isn't in your head: If you're watching every penny because you're so focused on leaving your assets behind, find out if that's something your loved ones even want or need. It's possible that your family will tell you they would much rather you enjoy your money while you're alive than leave it behind for them.
A man in his mid-50s today has a one-in-three chance of reaching 90, while a woman in her mid-50s has a 50% chance. That means you could find yourself spending nearly as many years in retirement as you did at work. Don't spend that time worrying. Instead, use your life experience to adopt solutions.
The $23,760 Social Security bonus most retirees completely overlook
If you're like most Americans, you're a few years (or more) behind on your retirement savings. But a handful of little-known "Social Security secrets" could help ensure a boost in your retirement income.
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