Thursday, January 31, 2008

Transition Yourself into Retirement

Golf was a passion he and Maud shared. Their retirement home overlooked a golf course, but they did much more than “overlook.

To be a successful retiree, you must successfully transition yourself into retirement in order to meet your retirement objectives. In addition, you have to plan the amount of money you need and what you want to accomplish with your savings. After all, you'll likely spend 35+ years in retirement so you must start planning now. In this article, we will discuss 10 ways that you can successfully transition yourself into retirement. They are as follows:
Have a plan. The best way to ensure that you will have a comfortable retirement is to plan how much you will need to retire.

1. Debt Reduction - Make sure that you do not carry your debts into retirement. Therefore, commit yourself to paying off as much of your debts as you possibly can. Eliminate car payments, credit card debts, personal loans, etc. Do what you have to do now to squash debt and make sure that you don't obtain any new debts either.

2. Have a Nest Egg of Emergency Funds - Have enough liquid funds in hand to cover at least a few months of expenses, without eating into your investments. Be prepared for the unexpected expenses while you transition into retirement. After all, emergencies will certainly come up but if you have a certain amount of savings, you won't have to worry about them.

3. Adequate Insurance Coverage - Make sure that you have adequate insurance to cover your life, health, homeowners', and auto insurance policies. Reassess your insurance needs on a yearly basis to ensure that they suit your retirement needs. Be open to making changes as needed and check out your employer's retirement coverage. Many of folks have been unpleasantly surprised to learn that their employers will no longer cover their medical expenses after they retire. So, if you find out now, you can take the necessary steps to protect yourself and your family.
Consider your options– Consider your many available options. Whether you ‘ease' into retirement, take a course at a college, or work some part time job or pursue a volunteer position, do what you want to do and let no one tell you what you need to do while in retirement.

4. Retirement Income Plan - To ensure that you don't outlive your assets, develop a retirement income plan that includes your income and expenses. Keep track of your current expenses and cut back as needed.

5. Social Security Benefits - The rules for benefits are rather complex, so talk to a Social Security representative a year before you plan to retire. By doing this, you'll be able to understand your benefits and how much you're covered. In addition, you should apply for social security three months before you want to start collecting your benefits or three months before your 65th birthday.

6. Contribute to a Savings Plan - If your employer offers a tax-sheltered savings plan (such as a 401K), make sure that you contribute as much as you can. Not only will this substantially lower your taxes but will also make huge difference in your financial security due to the magic of compounded interest.
Evaluate current lifestyle and make necessary changes. Third, evaluate your current lifestyle, financial situation and then decide whether your retirement income will provide you with enough money to support your current needs.

7. Review Wills and Trusts - Make sure that you have a valid will and/or trust. Not only will this protect your assets but will give you peace of mind.

8. Invest in IRA - By putting money in an Individual Retirement Account (IRA), you'll cleverly delay paying taxes on investment earnings. If you invest $2,000 in IRA at 4% when you are 30, it will grow to $112,170 by the time you are 60. Now that's a lot of moola for simply being smart!

9. Follow Basic Investment Principles - Just remember that how much you have for retirement depends on the type of investments you make now. Learn how to multiply your savings using mutual funds, stocks, bonds, etc. Consult a financial advisor for additional information.

10. Know About Medicare - Find out when it is appropriate to apply for Medicare and then apply. The Medicare application process and premiums may vary, depending on your age and whether or not you are receiving Social Security by being aware of the type of Medicare you may qualify, you'll be ahead of the game. For instance, the two parts of Medicare are:
Work longer – Social Security retirement benefits are based on your age, how long you work and how much you earn. Many women make the mistake of taking Social Security as soon as they are eligible.

- Hospital insurance, which generally you do not pay. It helps to pay for hospital, hospice, and home health care.

- Medical insurance, which you pay. It helps pay for doctors, outpatient care, and other medical services.

Follow our suggested ten steps and you'll not only improve your mental health but you'll also transition yourself into a happy and financially secure retirement.