When we talk about retirement, most of us have in mind our parents’ retirement and how they did (or didn’t) plan properly for it. We tend to think that our retirement will differ significantly from that of our parents, but there are still lessons to be learned from them in preparing:
1. Seek out a pension plan. If you are considering a career change or job move, it may be a good time to look for companies that offer traditional pension plans. Having a pension can make an incredible difference in retirement security.
2. If you don’t have a pension plan, compensate. Start investing now in a 401(k), an IRA or other defined contribution plan early and keep investing in it throughout your working life. Figure out what you could have made if you had a pension plan, and contribute that amount to your own plan.
3. Save for a long life. We won’t live forever, but that doesn’t mean you shouldn’t save as though you would live forever. Running out of resources in your 80’s or 90’s is a frightening prospect; medical advances are extending life spans and you need to save for a long life.
4. Plan for health care expenses. It is estimated that most Americans will spend at least $240,000 on health care during retirement, and you will either need to save that amount or have a health coverage plan in place to cover your retirement medical costs. The alternative? All your assets are used to support your medical care and then you use Medical Assistance, leaving nothing for your family.
5. Start early and stay the course. As soon as you start working, aim to save at least 10 percent of your income every year – 15 percent is even better if you have the discipline. Establish the habit and keep saving throughout your working years. As your salary increases, so will your comfort in retirement.
If you’d like to talk about how your retirement planning strategies tie in with your estate planning, call our office at (612) 206-3701 or fill out our contact form today to schedule a time for us to sit down and talk.
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