Financial Planning for Older Adults
As we age, it’s easy to feel that there are many things we can no longer control—especially when it comes to our finances. When it comes to financial planning for older adults, it may seem that our financial trajectory is already set in stone. That is neither encouraging nor exciting, but, more importantly, it may not be true.
It’s important to realize that you have more control than you might think, regardless of your age. Even if you’re nearing your sixties or already hitting “retirement age,” you can still influence many aspects of your financial life—including how long you want to work, how much you want to save, and how much you want to spend in retirement.
While everyone’s situation is different, there are some basic questions to consider as you start to fine-tune your retirement plans:
How long should you work?
One option to consider is working full or part-time after retirement. Not only can a little bit of extra income help extend the longevity of your retirement portfolio assets, but it can also provide meaningful personal fulfillment, socialization, and community involvement. If you’re planning on a specific retirement age (or if you’ve already retired), it’s not too late to realize the benefits of part-time employment after retirement.
When should you start claiming Social Security benefits?
If you were born after 1960, you have a full retirement age of 67, and initiating your Social Security prior to that age will reduce the annual benefits you receive. If you’re able to delay claiming Social Security benefits until you turn 70, you’ll maximize those benefits. It may be worth considering a few more years of full- or part-time employment if you could optimize the timing of your Social Security claim.
What about health care?
Health care is another important consideration in retirement. Most people underestimate the amount of funds they’ll need to set aside specifically for their health, so it’s crucial to plan ahead. If you enjoy a high-quality health insurance plan through work, think about your coverage plans before you retire. If there will be a period of time before Medicare benefits kick in, you may need to make arrangements for individual coverage through “The Exchange” or ensure that COBRA coverage will cover that time.
Don’t dismiss this step, even if you’re in good health. Anything can happen and medical care for accidents or rapidly developing health problems can be incredibly expensive.
Getting to Work on Your Retirement
Once you’ve worked through these questions, you can take action by considering the following:
- Determine your retirement goals. Your retirement may look different from your peers’—or even what you thought it might look like earlier in life—but that’s okay. Think about how your lifestyle will change and what you want your days to look like. Once your retirement lifestyle goals are in focus, your financial advisor can help you determine how you’ll meet them.
- Look at your budget. Decide how much you’ll need to spend on needs and wants and how much you can save. You’ll likely want to consider ways to save more to meet the lifestyle goals you’ve set. While the thought of analyzing and balancing a budget may induce anxiety, a budget can help you feel more in control and reduce financial stress.
- Find a fiduciary professional to help you reach your retirement goals. A good financial advisor can review your budget regularly and make sure you’re on track to meet your savings goals. Be cautious: you’ll want to choose someone who will work in your best interest and has the expertise and experience necessary to support you as you enter this exciting new chapter of your life.
Whether you’re an older adult approaching retirement or helping a beloved senior family member take control of their finances, navigating retirement planning can be daunting and complex—and may come with weighty emotional concerns such as running out of money or becoming a burden on your family.
While trepidation around this topic is understandable, it’s important to remember that you have more control than you think. Working full or part-time, delaying Social Security benefits, and planning for health care are just a few strategies to help you achieve your unique retirement goals. You also have the option of working with a fiduciary professional like Truepoint or Commas—so you can enjoy confidence and financial peace of mind before and in your retirement.