By Tracy Layden
Previous generations thought of retirement as reaching 65, moving to Florida and living off Social Security and their pensions. But for many of us not yet at retirement age, our retirement is going to look a little different.
First, we have a longer life expectancy, thanks to better health care and higher living standards. That means we will need more resources to live comfortably in our "extra" years. And second, many of us can't count on Social Security or pensions to support us.
Retirement planning is important, because these days, it's up to us. Typically, our jobs won't provide for us after we leave them. What we can count on is our own retirement plans.
Take advantage of employee and government benefits (before you retire)
When it comes to saving money, start saving yesterday. Tuck your savings in accounts where it will grow. And take advantage of programs that maximize what you'll get from your employer and the government:
- Put money into a 401(k). Put in the maximum amount you can. If your employer has a matching program, invest as much as they will match—it's like free money!
- Work past 65. Today's seniors are often retiring later than 65. If you like to stay busy, the extra income (plus your employer's health benefits, if available) will only help your savings.
- Delay Social Security. If you put off taking Social Security payments until after 70, you will get larger payments (between 3 percent and 8 percent) when you start taking the money.
Are you planning to live off your savings in retirement? Do some math to figure out how much you will need to have saved. If you want to maintain your current standard of living, look at how much you currently spend a month and divide your savings by that number. That's how long your current savings will last in retirement.
Know what insurance you'll use once you retire
- Private insurance. Private insurance is the kind you may get through your employer or you may need to buy it on your own if you don't have an employer who offers it. You choose coverage based on what you need and what you can pay.
- Public insurance. Government programs are subject to changing rules and regulations, but the two main types are:
- Medicare is the insurance the federal government provides to those over the age of 65 or those with specialized health problems like dialysis and transplants.
- Medicaid is a joint federal and state program and is available if you are considered low-income or have certain disabilities. It, along with the Children's Health Insurance Program, may also cover children, pregnant women and some seniors.
Insurance, particularly government insurance, can change as new laws are made. Keep an eye on your policy and adjust it if it no longer covers you the way you need.
Keep in mind that retiring will affect your insurance coverage. If you lose coverage under your employer, you will have an enrollment period of 120 days to find and enroll in a new plan.
Retirement planning doesn't have to be the pits
Retirement is like baking. Put together the right ingredients for the right amount of time, keep an eye on it, and take it out when it's golden brown. It's all in the preparation. The sooner you start, the better.
There are numerous retirement planning sites online, including ones provided by the Social Security Administration and Medicare. You may also get good advice by contacting your local senior services or Agencies on Aging organization.
Even if your retirement is coming sooner rather than later, you can still grow your wealth. Our retirements may not look like our grandparents imagined, but sitting on the beach doesn't have to be out of reach.
Tracy Layden is a Certified Aging in Place Specialist. Born and raised in Silicon Valley, Tracy leads the marketing efforts at Alert-1, a personal safety technology and consulting firm dedicated to helping seniors live safely and independently. Tracy holds a degree in mathematics from Scripps College and is an accomplished ballroom dancer and equestrian.