Retirement is right around the corner, and—if you’re like most people—you want to make sure you’re prepared. The 10 years leading up to your retirement can be some of the most important. During this time you’ll probably want to make saving a top priority. If you’re age 50 or older, you’ll be able to make catch-up contributions to your 401(k) and IRA. These rules allow you to make additional contributions above and beyond the standard limit.
Saving isn’t the only thing you can do to prepare, though. There are a few other things you should consider that might help you minimize risks and hit your retirement goals. Below are some steps to consider so you can enjoy a comfortable and stable retirement:
Contribute to an HSA.
While Medicare will help you cover some of the medical costs you’ll encounter in retirement, it won’t cover everything. In fact, Fidelity estimates that retirees will spend $260,000 on out-of-pocket health care expenses.1 If you don’t plan for these costs, you could be putting your savings at risk.
One way to prepare for medical expenses is to fund a health savings account (HSA). An HSA allows you to make tax-deductible contributions; it offers tax-deferred growth in the account; and it lets you make tax-free withdrawals as long as the funds are used for health care costs. You keep your HSA with you after you retire, which means you can save on a tax-advantaged basis today for health care costs in the future.
Consider long-term care insurance.
According to the U.S. Department of Health and Human Services, 70 percent of retirees will need long-term care.2 People typically require this type of care if they need help with things like dressing, bathing and mobility. Long-term care can be provided either in the home or at a facility. Either way, the cost associated with this care can be very high.
You could consider purchasing long-term care insurance. This allows you to pay premiums today in exchange for coverage in the future. While there are many different types of long-term care insurance, most cover in-home or facility care. There are even some plans that offer death benefits in the event you don’t need long-term care during your lifetime.
Develop a backup plan.
Life is unpredictable, and it’s nearly impossible to plan for every outcome. You may reach retirement and find you have less savings than you’d expected. Or you may be forced to retire early because of a job loss or disability. You might even encounter a medical emergency that could drain your savings.
It might be a good idea to have a backup plan. One thing you might consider is to work part time in retirement. Or you could downsize to reduce your income needs. Having a strategy to deal with unexpected events might help you avoid losing your retirement savings.
Ready to make the final planning decisions before you retire? Let’s talk about it. Contact us at Trinity Financial for more information. We welcome the chance to help you analyze any remaining questions and develop a strategy. Let’s start the conversation today.
Advisory Services offered through Change Path, LLC an Investment Advisor.
Trinity Financial Group and Change Path, LLC are not affiliated.
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