Most retirees’ expenses are considerably greater than their Social Security benefits. In fact, Social Security benefits provided an average of only 36 percent of the total income for those ages 65 and over, according to a recent study by the Social Security Administration. This means retirees often need to plan for other sources for retirement income.
Saving for retirement
Time and the power of compounding interest can be your two best friends when saving for retirement. A 25-year-old who saves only $1,000 a year could have $259,000 when she turns age 65 (assuming an 8 percent return). If the same person waits until age 45, she would possibly have to save more than $5,600 a year to reach the same goal.
It’s never too late to start planning and saving for retirement, though. If you save $400 a month in a retirement account starting at age 55, you could have more than $73,000 at age 65 (assuming an 8 percent return).
Income and expenses
Many people discover they spend their money on different things after they retire, but the amount needed doesn’t change a great deal – especially in the early years of retirement. You may not be spending as much money for clothes and commuting, but you may spend more for travel and other leisure activities or higher medical expenses. Many financial professionals assume you will need 70 percent to 80 percent of your pre-retirement income as a starting point.
Life expectancy
Life expectancy has increased dramatically with advances in medical care, and there is every reason to believe this trend will continue. According to the U.S. Department of Health and Human Services, if you reach age 65, you are likely to live another 16 years if you are a male and another 19 years if you are female. And 50 percent of us will live even longer. Many financial professionals use age 90 as your life expectancy.
You’ll need to know what your monthly expenses will be when you retire. Then you can factor in your savings with other income sources, including Social Security benefits and retirement plans, such as a 401(k) or 403(b).
How Everence can help
Consider rolling over your 401(k) accounts and adjusting your savings/investment accounts to fit your retirement needs. An Everence financial professional can help you do that. And if you are looking for a steady stream of income, an annuity can provide that during retirement. Annuities can give regular payments and earn interest, no matter what the stock market may be doing.
Medicare helps older adults pay for some of their medical bills, but it doesn’t cover everything. It also doesn't pay for most long-term care services - and neither do health insurance plans. Long-term care insurance can protect you from the significant costs associated with nursing home or home health-care convalescence.
How Everence can help
Learn more about additional insurance options to pay for other medical bills. Learn more about the Everence wellness benefit for older adults.
We may not think of life insurance as part of a retirement plan, but it can help provide the finances your family needs for such things as funeral expenses, everyday bills and income for your spouse. Life insurance can also help ensure businesses continue to run if an owner dies.
How Everence can help
An Everence financial professional can help you choose the right life insurance plan, including term and universal life options, as well as help you with estate planning.
If you're wondering about how a Roth conversion works, Chad Campbell, CFP®, helps explain what it is and how people use it for their retirement planning.
Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes. We encourage you to seek personalized advice from qualified professionals regarding all personal finance issues.
Hypothetical results are for illustrative purposes only and are not intended to represent the past or future performance or any specific investment. Philosophy of compounding does not guarantee profit or prevent loss. Investment return and principal value will fluctuate and when redeemed, the investment may be worth more or less than their original cost. Results assume no withdrawals and reinvestment of all interest and dividends.
Securities offered through Concourse Financial Group Securities, Inc., Member FINRA/SIPC. Investments and other products are not NCUA or otherwise federally insured, may involve loss of principal and have no credit union guarantee.
Products and services offered through Everence Trust Company and other Everence entities are independent of and are not guaranteed or endorsed by Concourse Financial Group Securities, or its affiliates.
