As you approach your retirement, it is important o plan for the road ahead of you. For many people retiring today, you can expect your retirement lo last as long as 30 years! As a result, the decisions you make up front as you prepare are crucial as they set you up for a long retirement period. Without understanding the long-term impact of your decisions made before and in the beginning of your retirement, a retiree could be well into retirement before realizing the impact of improper planning. The most important points are:
- Inflation will erode your income over time (that is, the purchasing power)
- Longevity needs to be planned closes as it will determine how long your money will last
- Market volatility has a major impact on the performance of your resources
- Healthcare expenses can deplete most of what you have saved
The time to master plan is before you retire since the decisions you make in the early years of your retirement are the ones that will set you up for success (or failure) for the properly planned retirement that you deserve. Here are the six things you can do now to set you up for success:
- Put together a detailed annual budget. Keep in mind that the you need now is different that the amount you will need when you are retired. Also, your needs will change over time – you may be more active and travel more in your early retirement, while healthcare costs may be higher in your later retirement. If you plan to work (or volunteer) part-time, this has an impact on how much time you will spend consuming.
- Detail your annual income and identify the sources of the income. Different income sources produce different cash flows. Making a blanket assumption of return on investment ignores how your savings are actually held and what they can earn. Cash in a bank account is great, but remember that it does not produce much (if any income). Your income can change over time, so you should be careful to include these changes in your annual budget.
- Map out your assets and identify their purpose. As mentioned above, cash in a bank account is not earning anything, nor is the equity in your home. While these are key assets, they do not generate current, consistent income. Asset fall into two categories – those that are going to be spent and those that earn income.
- Couples need to plan for the passing of their spouse. If you are a couple, your income strategy likely includes the income/benefits (social security and/or pension) of both people. If one passes, those person’s income/benefits will no longer be available. It’s important to know the impact of a death occurring on your income/benefits. Life insurance can be explored as an option that can be used to replace the benefits/income of a deceased loved one.
- Make sure key legal documents are signed and kept in a safe place. It is important to have updated/current legal documents in place – wills, trusts, medical directives, financial power of attorney, etc. – ahead of time. Don’t make the mistake of waiting until these documents are needed (at which point it can be next to impossible to complete). If you have a trusted advisor or family member, make sure they are aware of these documents are where they are kept in case of emergency.
- Make contingencies for health care costs if you need long-term care. You should understand the costs of getting long-term care – whether that is nursing, home, or assisted living care. You can allocate these expenses in your budget or explore insurance coverage for these expenses.
Following these six tips can make the difference in your financial well-being during your retirement. Remember to continually assess your plan and make adjustments, during your retirement, to take into account current circumstances and changes. Another step to prepare for your retirement is to review your existing life insurance policy and determine if it is still meeting your financial and planning needs. Perhaps your situation has changed, financially or otherwise, and the burden of the policy is impacting your quality of life. You might be able to sell your policy for cash and reset your financial plan. A life settlement transaction is a powerful tool that allows life insurance policyholders to sell a life insurance policy for cash, which can be used however needed. In addition to the cash up front, you no longer need to make future premium payments, helping you reduce your expenses. If your retirement plan shows you don’t have the cash saved you need, selling your life insurance policy can fill that gap.
You can get an instant estimate of the value of your life insurance policy by visiting the Q Life Settlements calculator. You can also call Q Capital at 866-679-9410 or email us firstname.lastname@example.org to discuss your situation. Our team is available and ready to explain to you all that you would want to know about life settlements.
Remember: Never abandon a life insurance policy without looking at the life settlement option first!