Saving for your retirement may not be so important when we’re young, but as we age we begin thinking more and more about it. How old will you be when you decide you don’t want to work full-time anymore? Or, more importantly, will you get to a point in your life when you feel you no longer can work full-time—or at all? These are the reasons why it’s important to not only begin thinking about your retirement when you’re younger, but it’s important to start doing something about it. Thankfully, if you’re older, you still have time to save for your retirement, but naturally, you have less time which means you’ll need to go a little more gung-ho at it. Whether you already have an advisor or you’re shopping for one, you need to know the questions to ask about your retirement in order to start saving properly. Top financial advisors have the 5 most important questions you must ask that will help ensure that you’re ready for retirement whenever you get there.
The first question you need to ask about your retirement is a question that only you (and your partner) can answer: What do I want out of my retirement? You need to sit down and map out a realistic vision of your future that includes such items as where you will live and what you will do. For instance, have you and your spouse always dreamed of the proverbial cross-country Winnebago retirement? Or perhaps you’re the kind of guy who wants to spend his retirement fishing? Whatever your retirement looks like, do a little research in advance about what you’ll need. Then take the following questions to your financial advisor.
How much will I need to save?
Remember that the older you are when you begin saving, investing, and receiving a return on your money for retirement, the more you’ll need to put in from each paycheck. When you reach retirement age, you’ll need from 70 to 100 percent of your pre-retirement income to maintain your present standard of living when you finally do get down to retiring. A good financial advisor will be able to calculate your needs based on your current age, your current income, prospective realistic future earnings, considering any and all current investments and/or savings you have now. That person (or firm) will also need to take into consideration the healthcare you’ll need, any taxes you’ll need to pay, life insurance you may need, etc. against what your overall monetary need will be to keep your current standard of living through retirement.
When should I begin taking my Social Security, pension payout?
Americans can begin taking their Social Security benefits out between age 62 and age 70. Full benefits can be obtained at age 66, so it’s important to know that if you begin taking it out early, you’ll get a permanently reduced amount. Benefits increase by roughly 8 percent per year if you begin taking them after age 66. Ask your financial advisor to figure out which would be best for you. It’s important to note that there are many more intricacies than most folks know about Social Security, but a good financial advisor will be able to help you figure out which age is best for you to begin taking your benefits. This is also the case for any pension payout you will be entitled to when you retire.
Should I pay off my mortgage?
Paying off your mortgage may or may not be to your advantage, depending upon certain factors as how long you’ve lived in your home, how much money you have saved, etc. Talk to your financial advisor before you pay off your mortgage; what you save monthly may not benefit you considering what you may be able to gain from an investment.
None of us like to think about getting older, but most of us probably like thinking about retirement. What we’ll do when we don’t have to work full-time anymore; where we’ll live when we don’t have to think about being near our jobs any longer—these are the things we daydream about when we think of retiring. But, understandably so, it’s much more important to live in reality and plan concretely for your future retirement. The next time you meet with your top financial advisor, be prepared—come armed with the most important questions you need answered about your retirement in order to formulate your most effective plan for the future.