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9 frequently asked retirement questions

They say there’s no such thing as a stupid question. And that’s definitely true when it comes to retirement! You may feel like you’re the only person who doesn’t have all the answers, but we guarantee you’re not alone. Check out this Q&A for answers to some of the most common questions we receive about retirement.

1. How do I save for retirement?

The best way to save for retirement is in a retirement savings account. There are many types of retirement funds, such IRAs, 401(k)s and annuities. Retirement accounts are created to give people incentives to save for retirement. You may receive tax breaks on your savings, and your accounts could shield your investments from the IRS as they grow.

It’s important to start saving for retirement as soon as possible during your working years. Most experts recommend saving at least 10% to 15% of your pretax income, but doing your own calculations is important. A retirement professional can help you determine a personalized retirement savings goal.

2. How do I retire?

Retiring isn’t as simple as giving your two weeks’ notice. There are logistics to consider, including how you’ll transition from the steady income of a paycheck to paying yourself from your retirement savings. By working with a finance professional, you can create a schedule that plans when and how much you’ll pull from your retirement accounts

3. When should I retire?

There are many factors to consider when deciding when to retire: the size of your nest egg, your debts and when you can start receiving Social Security benefits. There are other constraints you may also need to consider. For example, some employees must work for a predetermined number of years to be eligible to receive a company pension. And you won’t be eligible for Medicare until you turn 65, so you may need to continue working to receive health insurance.

4. How much money do I need to retire?

Ahh, the million-dollar question (pun intended)! While we can’t give you a hard-and-fast number, most experts say you should aim to replace 70% of your annual pre-retirement income. Use an online retirement calculator to get an idea of how much you need to retire, and work with a financial professional to help reach your goals.

5. What about Social Security?

The Social Security benefit is a monthly check that replaces part of your income when you retire. The earliest you can start receiving Social Security benefits is age 62, but you won’t receive your full benefits unless you delay your benefits until your full retirement age.

The amount you’ll receive depends on when you start collecting benefits. If your full retirement age is 66 and 8 months and you start collecting then, you’d receive $1,000 per month. If you started collecting Social Security at 62, you’d only receive $716 a month. But if you waited until 70, you’d receive $1,266 a month.

When it comes to Social Security, the important thing to remember is: It isn’t designed to fully replace your savings or wages.

6. Can I retire with debt?

Most financial experts will agree that paying off debt before retirement is crucial. If you have a car loan or a high-interest credit card, focus on paying those off as you near retirement so you don’t have to worry about those expenses. When it comes to a mortgage, you should consider how paying it off could impact your ability to live comfortably in retirement; it’s ideal to go into retirement without debt, but don’t rob your retirement accounts to pay off your house.

7. How will I afford medical expenses in retirement?

Medicare is health insurance for people 65 or older, or people under 65 who have a disability, End-Stage Renal Disease (ESRD) or ALS (Lou Gehrig’s disease). Medicare is divided into Parts A, B, C and D and each part covers something different. Some parts are included in Original Medicare, which is managed by the federal government, while other parts are offered by private companies. Original Medicare provides good protection, but it doesn’t cover all health care costs. Many people control their out-of-pocket expenses by either choosing a Medicare Advantage plan or enhancing their Original Medicare plans with Medicare Supplement insurance.

8. What expenses should I be prepared for in retirement?

One of the costliest—yet often overlooked—expenses you could face in retirement is long-term care. Long-term care is the assistance you may need with activities such as eating, bathing, getting dressed, taking medications, using the toilet and moving around the house. Paying for long-term care out of pocket requires significant financial assets, so many people turn to long-term care insurance to help.

A long-term care insurance policy is designed to help you pay for the long-term care services you need. Long-term care insurance policies typically reimburse policyholders a monetary daily amount (up to a pre-selected limit) for assisted care services such as eating, bathing or dressing. You can usually select a range of care options and benefits that allow you to get the services you need, where you need them.

9. What will I do during retirement?

Many people spend so much time financially planning for retirement, they forget to consider what life will look like once they stop working. Many pre-retirees believe that retirement will feel like one long vacation, but the reality is, suddenly going from a 40-hour work week to zero employment responsibilities can be jarring.

It’s important to go into retirement with a plan to keep yourself mentally and physically stimulated. Whether it’s immersing yourself in a hobby, caring for grandchildren, volunteering or learning a new skill, having something to fill your days will be important for your well-being. You may also consider working a part-time job or a side gig. This will keep you active for a few hours a week, plus provide a bit of extra income!

We’re beside you every step of the way!

Preparing for retirement is overwhelming, but you don’t have to face it alone. Bankers Life can be by your side every step of the way. Together, we can build a plan that helps provide security and peace of mind. To get started, contact us today, and a local Financial Representative will reach out to you.

Bankers Life is a private company that is not Medicare, Medicaid or MaineCare and is not a governmental agency