Most of us have done some retirement planning activities. In fact, according to a recent study from Vanguard, 90% of pre and recent retirees have “planned.” But, mmmm… “planned” can mean a lot of different things to different people. Does that mean you have thought about retirement? Or, does it mean you have a written plan addressing all the various financial and emotional aspects of your future?
There is a lot of variation in planning. And, some people are doing a lot more than others. In fact, only a few are creating a really comprehensive and reliable plan. Have you done more or less than the average? Is it enough?
Keep reading to find out exactly which questions people are tackling as they transition to retirement. Discover what more you might want to do.
60% of pre retirees have figured out “When should I retire?”
Figuring out the big date is the most planned activity. It makes sense, people look forward to the big day and you can’t retire without setting a date unless an injury or other event prevents you from working any longer.
However, if you haven’t answered some of the other financial questions, setting a retirement date is like inviting everyone to a party without a venue, food and beverage, music, or entertainment.
NOTE — average retirement age: The Boston College Center for Retirement Research puts the average retirement age at 62.8 for high school graduates and 65.7 for college graduates.
58% of pre retirees tackle this question: “When should I start Social Security?”
This is a great question to have answered.
Many people have a hard time resisting the lure of getting Social Security checks as soon as possible – age 62. However, waiting until later generally will mean a higher amount of money over your lifetime – unless you think you won’t live very long.
So, calculating when you “should” start benefits is a useful planning activity. Most experts recommend that you delay the start of benefits in order to maximize your monthly payments.
Explore 7 Insider Tips for Getting the Most from Social Security or use the new Social Security Explorer in the NewRetirement Planner, the planning platform that Forbes calls “a new approach to retirement planning.”
NOTE – most popular age to start Social Security: Claiming early at age 62 is the second most popular claiming age. Full Retirement Age (FRA) has gained in popularity over the last 10 years and is now the most common age people start benefits.
57% of pre retirees calculate “amount of monthly retirement income needed”
If you want to have a secure retirement, knowing how much income you need and when is one of the best retirement planning activities to have addressed.
Of course, getting this right can be complicated.
Some experts say that you should plan on spending 85% of your pre-retirement budget. Others suggest that your expenses will increase when you first retire, then slowly decrease until you start spending a lot of money on healthcare near the end of your life.
However, each of us is unique. It might be more realistic and reliable for you to actually think through your own plans in 3 or 5-year increments and budget each year appropriately with wiggle room for unforeseen circumstances. Or, create a detailed budget for the rest of your life. You can do both of these activities in the NewRetirement Planner and…
- Chart your monthly budgets overtime
- See lifetime expense totals
- Assess if your retirement income and savings are adequate to cover expenses
- Review which income sources cover your expenses in different months and years
NOTE – Average retirement income: The average retirement income is between $50,000 and $80,000 depending on age, location, and how average is calculated.
55% of pre retirees answer “how much do I need to retire?”
It may seem crazy that a full 45% of people are retiring without knowing whether they have enough money or not. However, while most people think that having a treasure trove of savings is the key to a secure retirement, some retirees are quite successful by just making it work with what they have.
Let the NewRetirement Planner help you decide how much you need. It will walk you through…
- Retirement income sources and date ranges for the payments
- Your expenses and how those will change over time
- How savings will get used and when
- Whether or not you will run out of savings
- How much you need to live the life you want
NOTE – Average retirement savings: According to Federal Reserve SCF data, the average retirement savings for people in their sixties is:
- $221,450 for people ages 60–64
- $206,800 for people 65–69
See average retirement savings for all ages.
47% have planned whether or not to work in retirement
Retirement jobs are increasingly popular. And, there are so many benefits to working in retirement — income, social connections, intellectual stimulation, sense of belonging and purpose, and more.
In fact, an AARP study reported that almost half of their respondents planned to have retirement jobs and be a working senior into their 70s or beyond. Have you thought about working in retirement? The kind of job? Hours? Pay?
NOTE – How Many Over 65 Are Still Working?: Whether it was planned or not, according to the U.S. Bureau of Labor Statistics, about 19% of Americans aged 65 and older are now in the workforce, up from about 12% in 1996. And, by 2026 nearly 22% of people 65 and older will be working, with those 75 and older experiencing the fastest growth rate.
46% have concerned themselves with managing government healthcare – Medicare and more…
Almost everyone signs up for Medicare at age 65. However, this benefit will not cover all of your needs. Out of pocket expenses for healthcare are sizable and figuring out the best way to minimize the expense is confusing.
The NewRetirement Retirement Planner customizes your out-of-pocket healthcare costs for you and factors this big expense into your plan.
Are you retiring early? Learn about 9 ways to cover healthcare if retiring before 65.
NOTE – average healthcare costs: According to Fidelity’s Retiree Health Care Cost Estimate, a 65-year-old couple retiring in 2023 will need an estimated $315,000 to cover health care costs in retirement.
43% have thought about drawdowns and/or generating retirement income
Turning your assets into income is one of the most critical retirement planning activities. You have spent your life saving, now you need to figure out how to withdraw it so that you have enough for as long as you live — no matter how long that turns out to be – while being tax efficient.
Studies show that retirees who report having a guaranteed income that exceeds their spending report less stress and an overall happier retirement.
42% address how to manage investments after retirement
Ideally, you have been focused on saving money every month and investing in a way that has grown those investments as much as possible. After retirement, most experts suggest that you shift your mindset to be about preserving and using that money.
Less than 35% create a plan for long-term care, taxes, estate, or home equity
Each of these subjects is critically important for a complete retirement plan, but very few people are addressing them.
About 70% of people who turn age 65 will need some type of long-term care in their lifetime, according to the U.S. Department of Health and Human Services, but few are prepared to pay for that care and it can be prohibitively expensive and is not covered by Medicare. Explore creative ways to fund a long-term care need.
The importance of worrying about taxes in retirement may depend on your wealth, where you live, how you get income, and other factors. See your tax liabilities in the NewRetirement Planner.
Everyone should think about their estate plans — whether you have wealth or not — there are documents that can make the end of your life better for you and your heirs. Know about the 4 estate planning documents everyone needs.
Many people have more wealth in their home than savings. It is therefore important to consider your house as part of your overall retirement plan. Should you downsize now and use the money to help create retirement income? Or, would it be better to wait and sell the home if you ever need long-term care? The ways to tap into your home equity are endless and can mean the difference between a stressful and stress-free retirement.
The NewRetirement Retirement Planner lets you model all of your housing options to see the impact on your overall retirement plan.
Get All of Your Retirement Planning Questions Answered
The best retirement planning calculators can help you get all of the answers to all of these questions.
NewRetirement has created a comprehensive and highly personalized tool. Forbes Magazine calls it a new approach to retirement planning and it was named a best retirement calculator by the American Association of Individual Investors (AAII).