Your Financial Future:
Retirement Readiness Checklist
Answer these six questions to see if you're really ready to retire!
1. Have you considered what annual income you will need in retirement?
Is it 75 percent of what you earn now? It could be more or less than that, depending on your basic needs. Remember that Social Security usually covers about 40 percent of an average earner’s pre-retirement income. You need to know where the rest of the money will come from.
2. Have you considered how long you might live in retirement?
Many people do not realize that retirement can last 20 to 30 years. It is important when planning to assume that you will have a long life in retirement. The longer you live the more likely inflation will erode the value of your savings.
3. Have you considered the cost of Medicare premiums?
They are automatically deducted from your Social Security check. In 2012, most beneficiaries will pay $99.90 for their Medicare Part B premiums, depending on income, enrollment status and Social Security benefits. The Medicare prescription drug benefit premium averaged $29.67 in 2012.
4. Have you considered the cost of health insurance outside of Medicare?
You may consider purchasing a “Medigap” policy in order to cover the costs that Medicare does not cover.
5. Have you thought about how you will handle your savings once you retire?
If you have saved through a 401(k) type plan, you will be responsible for managing your own money, or hiring someone to help you do it.
6. Do you know how taxes will affect your retirement income?
If you receive money from a tax-deferred savings plan such as a 401(k), you will need to pay taxes on the amounts you receive. You also may have to pay taxes on your Social Security benefits.