Planning For Retirement
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As much as you love your profession, from time to time you look forward to retirement. Will you travel? Do charity work? Spend hours on the golf course? Take up a new hobby? Perhaps you want to simply be there for your children and grandchildren. At Phelps Law, our business is designing estate plans that enable you to maximize the value of your estate so you have a legacy to leave for your heirs. Part of estate planning involves planning for retirement. Here are a few things to keep in mind as you dream of endless summers and extended holidays.
One of the key steps you can take now to plan for retirement is to reduce your debt load. Mortgages and auto loans make up a significant chunk of household debt. In addition, the average American carries about $16,000 of credit card debt. Debt is a huge millstone around the neck of most people in the 25-35 age bracket: with credit cards and student loans, average Millennials are in debt to the tune of $42,000.
How you reduce your debt when housing costs are increasing and automobile transportation is essential? The best advice given by financial planners is to pay off high interest loans first. That means you need to get out of credit card debt. By eliminating this debt factor, you have more money to pay off student loans and home mortgages. When you enter retirement, you want to be debt free so you can enjoy the fruits of your labors.
While you are making money in your prime, you need to consider saving as much as you can because your earning ability is likely to decrease as you near retirement. Whether it’s a youth oriented job market, your physical stamina, or mental interest in your work, many people find they are less productive as they near retirement age. Wise planning for retirement means the time to save is now. The earlier, the better: procrastination will not satisfy your financial needs in the long run.
How much money will you need to live in retirement if you want to maintain your present lifestyle? Most planners say you will need about 80% of what you earn in your peak years. Begin now to figure out what you want to do in retirement and how you will cut down expenses so you can live the life you desire from the money you have saved. If your home is paid off and you downsize, you will be able to live with less worry.
What would happen if you suddenly became incapacitated in your retirement? You need to consider now how you would pay for nursing home care. Medicare will not cover these expenses. Medicaid may help, but if you’re going to count on that, it needs to be planned for so you don’t lose your assets. There are certain annuities and long-term care insurances that can pay for extended nursing care. These are best purchased while you are still young so that your monthly premiums are affordable.
As you can see, planning for retirement is one critical component of a properly designed estate plan. Phelps Law has been serving Gilbert, Mesa, and Chandler with excellent estate planning know-how for four decades. As a second generation firm, we have helped thousands of folks like you to plan for the best possible, successful retirement. Call us for an appointment to discuss your needs for the future. Your first consultation is free. Remember: failing to plan is like planning to fail.