Are You Ready to Retire?

 Posted on August 06, 2015 in Estate Planning

Most of us work for the majority of our adult lives with the end goal of being able to enjoy a comfortable retirement. It seems that every so many years, the age most people retire at increases. It used to be the age of 65...then 68...then 70 years of age was the target. These days, the age of 72 is one that is brought up in many discussions about finally being able to retire. But no matter how much planning, saving, and investing you do, how do you really know when you are ready to finally stop working?

Financial planners say there are several factors that you should consider when making that determination. First, you should determine how much you will receive in Social Security benefits. The federal agency will provide you a report that shows how much income you have earned and how much your benefit will be at various ages. If you are married, then you will also want to determine what the maximum benefits for you and your spouse will be.

Once you have determined what your Social Security benefit will be, then you need to ensure that all of your sources of income will cover your monthly expenses. A good way to do this is to add the amount of all 401(k) and other retirement accounts, brokerage accounts, and rental property income. Then, multiply the total amount by .04. Finally, add that figure to your Social Security and any pension income you have. That amount is what you should consider as your monthly income.

However, just because you can cover your monthly expenses, you still need to be prepared for the unexpected expenses that come up. For example, what if your car breaks down and needs a costly repair or something goes wrong with the heating system in your home? Do you have enough resources to cover those expenses? Having an emergency fund for retirement is important.

Another issue to consider is whether or not you qualify for Medicare or some other affordable health insurance plan, especially if you have been receiving your medical insurance coverage through your employer. In order to receive Medicare, you have to be at least 65 years of age. In order to retire younger than that, you may want to find out if you could qualify for health insurance from your employer through the COBRA plan.

If you have question about planning for your retirement future, contact an experienced DuPage County estate planning attorney. Call Stock, Carlson & Asso. LLC at 630-665-2500 today.