From Social Security benefits and pension plans to health care and taxes, retirement planning can seem daunting and complex. As a financial representative with Modern Woodmen of America, a fraternal financial services organization, I can help you simplify the process, clarify key questions and gain confidence in your retirement preparations.
Here, I’ll break down some of the complexities of Castro Valley residents’ frequently asked questions. With a little education and proactive planning, retirement can be an exciting new chapter filled with possibilities.
When should I start planning for retirement?
It’s never too early to start! Ideally, you’d start saving in your 20s or 30s. But if you’re older and haven’t, there’s still time! I can help you maximize savings in your remaining working years.
For young people, retirement may seem a long time off. But planning early allows your savings more time to grow through the power of compound interest (earning interest on your interest). Every year you delay saving, you could be missing out on potential growth.
That said, if you haven’t started saving for retirement, the key is to start planning now and take steps to secure your future finances.
How much savings do I need to retire comfortably?
This is one of the most common questions I hear, and there’s no one-size-fits-all answer. How much money you’ll need depends on your desired lifestyle in retirement, health care costs, your intentions to work part-time, and when you’ll start collecting Social Security, among other factors.
Retirement planning experts often suggest saving 70-90% of your pre-retirement income for annual retirement expenses. For example, if you earn $100,000 annually now, you may need $70,000-$90,000 annually in retirement to maintain your standard of living.
How should I start planning?
First, list your expected monthly expenses upon retirement. Don’t forget health care (ranging $300-$1,000 or more monthly for Medicare premiums), copays and dental, hearing and vision care. Next, identify your income sources, such as Social Security, part-time employment, and retirement savings withdrawals.
Using these numbers, a financial representative can help you come up with a detailed plan and determine how much you’ll need to save. We can also recommend adjustments – like working longer or downsizing your home – to minimize the risk you’ll outlive your savings.
What retirement savings options are available?
A 401(k) plan is a savings option available in many workplaces, but it’s not your only option. Your Modern Woodmen financial representative can explain alternatives and help select appropriate options aligned to your risk tolerance, time horizon and financial goals.
- Traditional and Roth IRAs allow your money to grow with tax benefits either now or when you withdraw funds from your account.
- Annuities can also help you accumulate retirement savings to last your lifetime. Options are available with flexible premiums, tax-deferred growth and low or no risk of market volatility.
- Health savings accounts let you set aside pre-tax funds that carry over year after year.
- Stocks, mutual funds and other investments can also help accumulate funds based on your goals and preferences.
When should I claim Social Security benefits?
Currently, you can start collecting Social Security at age 62. However, claiming benefits before full retirement age (67 for people attaining age 62 in 2023) can permanently reduce the monthly benefit you receive. By waiting until full retirement age, you’ll receive 100% of your monthly benefit.
A financial expert can help you choose whether to receive smaller checks for more years or larger checks for fewer years. Though delaying benefits is a wise choice for many people, what’s right for you depends on your situation.
How can I cover health care costs before I’m eligible for Medicare?
Most retirees’ greatest expense is health care. If you retire before age 65, you’ll need a plan to cover medical costs until you’re eligible for Medicare. Your options may include remaining on an employer plan through COBRA, choosing a private individual health insurance policy, or enrolling in a spouse’s employer plan or group policy.
Once you are eligible for Medicare, you’ll still need to budget for premiums, copays and uncovered costs like vision, dental and hearing care. My Modern Woodmen colleagues and I have partnerships to help you arrange supplemental coverage.
With the right guidance, retirement planning doesn’t have to be complicated. Modern Woodmen is here for the Castro Valley community. Our fraternal organization exists to improve our members’ quality of life.
You can call on me or my colleagues anytime for personalized solutions to secure your ideal retirement. We look forward to helping you gain financial peace of mind!
* Securities and advisory services offered through MWA Financial Services, Inc., a wholly owned subsidiary of Modern Woodmen of America. Member: FINRA, SIPC. Insurance products other than individual life and annuities are underwritten and issued by independent third party carriers and brokered through MWAGIA, Inc., a subsidiary of Modern Woodmen of America. Modern Woodmen is not affiliated with, nor endorsed by any government agency, including the Social Security Administration or the federal Medicare program.
