How to Avoid Outliving Your Retirement

The Center for Retirement Research at Boston College’s annual retirement risk index states that 53% of households are at risk of not having enough money for maintaining their living standards in retirement. The key findings of this report state:

·         The retirement landscape is changing and retirement for Baby Boomers will mean something different than it did for current retirees.

·         Health care costs significantly increase the risk of outliving your retirement.

·         Saving more and working longer may be the answer.

One of the most common mistakes people make is not saving enough, or starting too late. If your employer offers a match for your retirement account, make sure you are at least putting the maximum they will match into the account. (If you don’t—you’re losing money!)

For younger people who want to be pro-active in their retirement planning, a Roth IRA is a great start. Many people think they should convert their traditional IRA to Roth, but doing that will require you to pay income tax. A Roth IRA grows tax free!

For a worry-free retirement income, you should consider the following things:

·         Have a budget: One of the first things we do when meeting with a client is to assess their monthly budget. You should know the cost to maintain your lifestyle. You should always review your budget and cut wasteful spending.

·         Consider housing below your means. For most people, housing is the largest part of their budget. Living in a house that suits your minimum needs can provide more return in the long run. 

·         Have an emergency fund: Life happens! When unexpected expenses arise, it is important to have a backup plan. A safe emergency fund should provide you with 3 to 6 months of living expenses to fall back on.

·         Invest in your health: Healthcare costs are the biggest risk for people in retirement losing their income. Taking good care of yourself reduces the chance of this happening.

·         Consider an annuity: An annuity will supplement your income for as long as you live. You can structure an inflation rider to help offset the cost of inflation. We can help with this. 

·         Think about a post-retirement career. Being semi-retired can help you ease into retirement and supplement your income.

For this generation and the next, retirement will look very different than it has in the past. Planning for your retirement is increasingly important, and those who fail to plan effectively may suffer. For more information about successful retirement planning, contact us or visit our radio archive and listen to our Money Wise show on this topic. 

 

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Raymond C. Lantz, Jr. is the president and founder of USA Wealth Group, Inc. Ray has many years of experience advising clients in retirement and sophisticated tax planning strategies, multi-family and commerical real estate projects and legacy planning. Ray is a graduate of Clark University, holds a law degree from Boston College, and a Master of Laws in Taxation from Boston University. You can hear him every Sunday morning at 8:00 A.M. on "Money Wise with Ray Lantz", WBSM 1420AM or on the RadioPup app.