5 Moves Every Woman Should Consider Before Retirement
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Retirement should be relaxing. However, it’s hard to relax if you’re weighed down with financial woes.
As a woman, you probably spend much of your life taking care of others. However, you also need to take care of yourself, which includes ensuring your finances are ready for retirement.
Whether you’re planning to retire in the next few years or the next few decades, you’ll need to do a lot of planning. The more prepared you are, the better your chances of being in a good financial place to enjoy your golden years.
Wherever you are in your journey, here’s a look at five moves every woman should consider before stepping away from the workforce.
1. Estimate How Much You’ll Spend in Retirement
You can’t know if you have enough saved for retirement without estimating the amount you’ll spend each year.
Generally speaking, people tend to spend 55% to 80% of their current income each year in retirement, according to Fidelity®. Of that, approximately 15% of expenditures are healthcare related2.
Therefore, if your ending salary was $100,000 per year, you’ll likely need $55,000 to $80,000 per year in retirement — including approximately $15,000 in healthcare-related expenses.
It’s also important to think of the lifestyle you desire in retirement, as this will largely drive your cost of living. For example, you might save money by no longer having to commute to work and downsizing to a smaller home, but you could also spend more with frequent travel or buying a vacation home.
There’s no one-size-fits-all approach to retirement spending, so take the time to customize your plan to fit your lifestyle.
2. Devise an Income Plan
Right now, you pay for your expenses with your weekly, bi-weekly or monthly paycheck. However, this steady paycheck will come to an end when you retire.
Chances are, you’ll have a variety of income streams in retirement — Social Security, perhaps a pension, an annuity, a 401(k), etc. This is great, but you’ll need to figure out which accounts you’ll be tapping to pay your monthly bills.
It can be wise to work with a financial planner on this, as they can help you create a plan that minimizes taxes, while maximizing future earnings. This will ensure you’re truly getting the most from your money.
3. Consider Investing in an Annuity
Made for women by women, the ParityFlex™ annuity, available through the Gainbridge® digital platform, offers a guaranteed paycheck for life. That’s right, even if your account balance reaches zero, you’ll still get paid — assuming your account hasn’t reached zero due to excess withdrawals2.
Watch your investment grow while earning a APY*, which is 11 times the national average on a savings account. This rate will be locked in during your guaranteed interest rate period, so you won’t be impacted by rate fluctuations3.
This is an opportunity to earn serious interest, while safeguarding your investment from market volatility. You can relax knowing your money is secure and available to you at retirement. Check here to see how much you could earn for life.
4. Boost Your Emergency Fund
During your working years, experts generally advise having three to six months’ worth of living expenses in an emergency fund. Of course, emergency situations won’t stop happening when you retire.
When you no longer have a steady paycheck to rely on, it’s more important than ever to have an emergency fund. Generally speaking, you should have at least 12 months of funds easily accessible for emergencies, but if you can put two or three years’ worth aside, that’s even better, according to TD Ameritrade®.
No, you won’t be at risk of losing your job and needing to rely on your emergency fund until you find a new one. However, you will still incur unexpected expenses that don’t fit into your monthly retirement budget — things like a large medical bill, an HOA-mandated new roof for your condo or a hefty car repair bill.
When you have an emergency fund to rely on, you won’t have to tap into your cash reserves to fund these expenses. This will help you maintain good financial health in retirement.
5. Decide When You’ll Start Taking Social Security
Technically speaking, you’re able to start receiving Social Security retirement benefits at age 62. However, taking your benefit early will lower the amount you’ll get each month5.
You can receive full benefits when you reach your full retirement age, which varies by the year you were born. For example, those born in 1960 and later have a full retirement age of 67 years old5.
If you want to maximize your retirement benefit, you can wait until age 70 to start receiving it. For example, those born in 1955 — retirement age of 66 and two months — would receive 130.7% of their monthly benefit, because they waited 46 months to start collecting it6.Do note, if you decide to wait to receive your benefits until age 65 or older, you’ll still need to apply for Medicare benefits within three months of your 65th birthday. If you don’t, you may end up paying for Medicare medical insurance (Part B) and prescription coverage (Part D)5.
*Annual Percentage Yield (APY) rates subject to change at any time, and the rate mentioned may no longer be current. Please visit gainbridge.io/parityflex for current rates, full product disclosures and disclaimer, and other important information. All guarantees are based on the claims-paying ability of the issuing insurance company.
ParityFlex™, a multi-year guaranteed annuity, is issued by Gainbridge Life Insurance Company, Zionsville, Indiana.
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