We all would like to envision our retirement years as laid back and stress-free.
The truth is, however, that it doesn't happen on its own. You have to take the steps today to have that kind of future for tomorrow.
Planning for Retirement
Planning for retirement takes time and money to fund it. But some expenses shouldn’t be avoided. Financial catastrophes could seriously derail your retirement plans, so be sure to have:
- Adequate life insurance to protect your financial plan should a tragedy happen.
- Disability insurance to replace lost income if you can’t work.
- Adequate health insurance to protect you when you get sick.
- A three to six month cash emergency fund set aside in a savings account.
Getting Started — 20s and Early 30s
The beginning of your earning years is the best time to get in the habit of saving for retirement because you have one huge advantage — time. Try to save at least 10% of your pre-tax income in an employer-sponsored 401(k) or 403(b) retirement plan if one if offered. If your employer matches your contributions, contribute at least enough to maximize that match. When you leave that employer, roll your money over into a self-directed retirement plan, such as an IRA
, or transfer it to your new employer’s retirement plan.
Working On It — 30s and 40s
It’s important to find a way to squeeze out dollars for retirement during these busy years. Time is still on your side, but you are beginning to lose some of your compounding power. Try to invest a minimum of 10% of your salary toward retirement while working towards the maximum the IRS allows.
One of the classic conflicts during this life stage is saving for retirement versus paying for college. Most financial advisors will tell you that retirement savings should be your priority. Your child can usually find financial aid to help fund their education, or they can take out a loan. You can borrow for your kid’s education, but you can’t borrow for your retirement.
The Home Stretch — Your 50s & 60s
Boosting your retirement savings goal up to 20% or more of your income is important during these years. If you participate in an employer-sponsored plan, try to save the maximum permitted by the IRS. Workers age 50 and over can invest extra dollars into their employer’s retirement plan once they’ve maxed out their regular contributions.
You can also put catch-up amounts into your IRA if you are over age 50. Once you maximize contributions to your retirement plans, save additional money in investments that don’t create taxable income, such as an annuity.
Investing at this stage typically needs to be a little more cautious. As you near retirement, you just don’t have the time to make up significant losses to your nest egg. Financial advisors often recommend shifting some of your higher-risk investments into investments that are less risky. That often means reducing your investments in stocks and increasing your investments in bonds. There’s a lot riding on your financial plan at this point so working with a professional makes sense.
Getting a Late Start?
If you’re just getting started saving for retirement there are a few things you can do:
- Reduce expenses and invest the savings.
- Increase income through a second or better paying job.
- Maximize retirement plan contributions.
- Postpone retirement or work part time in retirement.
- Work with a financial advisor to develop a plan that is best for you.
The earlier you stop earning an income, the longer your nest egg needs to last. You may need to replace corporate benefits like health insurance or face a tax issue if you start drawing on retirement savings. Additionally, making the right choices regarding when to start receiving Social Security benefits or a pension are important decisions.
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Caring for an aging parent, elderly spouse, domestic partner, or close friend presents difficult challenges, especially when a crisis hits and you are faced with the responsibilities suddenly.
Whether you are planning ahead or dealing with an immediate crisis, it’s important to understand the kind of care you will need to give. Some questions to ask:
- Does your loved one need long term or short term care?
- What living arrangements are available?
- What nursing care plans are most appropriate?
- If they are able to stay in their own home, what kind of services can be arranged?
- Is assisted living an option or will nursing home care be required?
Remember that each situation is unique — medical history, financial resources, personality, relationships with potential caregivers, proximity to services, and other factors will determine the best approach to take.
Being Prepared — Sit Down and Talk
As people get older, taking care of relatively simple things such as bill paying can become more difficult. Talk over the basics in a non-confrontational tone and setting.
Is there a budget in place? If not, you can help them get a clearer idea of where their money is going and determine if their income will continue to be enough to meet their daily needs.
Are they’re having trouble keeping up with due dates and bill paying? Help establish automatic payments for loans and savings and take advantage of direct deposit for things like Social Security payments, IRA distributions, or other regular sources of income. Online banking can also be a helpful tool to manage accounts without the need to visit an actual branch as well as providing access to the caretaker is the need arises.Is their financial portfolio larger than simple bank accounts? Do they own property? Stocks. Investments?
Is there a will and/or living will in place? Has a power of attorney for finances and health care been appointed? Who holds the documents? Talk about their wishes regarding hospice care and burial.
Be Prepared — Gather the Right Information
- Accurate birth date and Social Security number.
- Names and contact information of family members.
- Names, phone numbers, and addresses of all medical personnel including doctors, specialists, dentists, and pharmacies.
- Copies of health insurance policies and the front & back of all insurance cards (if 65 or older, you will need a copy of their Medicare card).
- Make a list of all medications, dosage amounts, and instructions for taking them.
- >Date & results of recent medical tests, including exams, x-rays, CT scans, and MRIs.
- Complete health history, if possible, major illness and medical conditions of immediate family.
- Listing of financial assets, stocks, bonds, bank accounts, private investments and pensions.
In all situations, be respectful and allow as much independence as circumstances permit.
A Delicate Balance — Working While Being a Caregiver
High stress, changing schedules, and high demands are a constant threat to working care-givers’ well-being. If you hold a job and provide care for a loved one, start protecting yourself by actively addressing scheduling problems, taking advantage of support programs, and reaching out to others for help.
As a working caretaker, you may soon realize the difficulty of balancing caretaking and your work life. As soon as you realize there may be a problem, talk to your boss. Many caregivers are reluctant to discuss care-giving with their supervisor, fearing it will affect their job security or their prospects for advancement. While not all employers understand or are sympathetic to your situation, many will be aware of care-giving’s effect on productivity, and some offer formal programs to address the issue.
If your employer is not flexible or understanding of your needs during this time, you may have to consider hiring help at home or taking your loved one to an adult day care facility. If those options aren’t feasible, you may also need to consider a different employment opportunity, including part-time work.
Take Care of Yourself Too
Immediate financial concerns and care-giving demands often keep care-givers from setting aside time for themselves. It is important to remember to carve out this time, even just for an hour or two a day. Go for a walk, catch up with a friend, go to your own appointments or just take a break from the house. Ask a family friend or spouse to stay with your loved one while you spend some time taking care of yourself. Isolation is a major contributor to caregivers’ most common health problems; regular contact with friends is one of the best things you can do for yourself and your loved one. Meet with friends weekly for a coffee, lunch, or other social activities, and if you can’t meet every week, at least talk on the phone.
Care-giving support groups are another great way to spend some time for yourself. These groups of people understand what you’re going through and the frustrations you may experience. A support group can also suggest local services and programs you might not know about. You can find support groups through hospitals, churches, or community centers and online.
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