The average American spends approximately 20 years in retirement, but less than half of today’s working professionals actually know how much they need to save to live comfortably during their post-professional years. Additionally, the coronavirus pandemic forced nearly one-third of Americans to reduce or even eliminate their savings or withdraw money from their retirement accounts.
Commercial real estate professionals should take their retirement considerations seriously, especially as the country enters the post-pandemic landscape. A strong retirement plan can help people grow their savings accounts while building the foundation for a strong and stable financial future.
Read on for some steps toward a successful retirement, and visit Part 1 of this series here to learn more.
Research Social Security
While everyone knows that Social Security can supplement their retirement finances, few people are doing their research to ensure they are taking full advantage of the benefits this program has to offer them.
Principal suggests setting up a “my Social Security” account via ssa.gov to gain a better understanding of what the potential benefits may be. These payments will vary depending on the age that they’re accepted, particularly if a person retires before the “full” retirement age as determined by the government. It’s also important to note that benefits can also be taxed.
For those still in the early stages of retirement planning, this additional step may seem like a confusing and complicated task. It is necessary, though, for anyone who plans to rely on Social Security to supplement their post-professional lifestyle.
Factor In Healthcare Costs
Aspiring retirees may be able to control the amount saved or spent, but AARP warns of one expense that can’t be predicted: healthcare costs. While there are many ways to manage pre-existing conditions and proactively safeguard one’s health, no one can fully prevent potential future illness or injury. Fidelity estimates that a couple could spend as much as $300K in healthcare costs during their retirement years. If a person retires prior to the minimum age required to receive Medicare, this amount could be much higher.
Pinpointing the exact overall medical expenses a person may have throughout retirement is impossible. However, it is possible to come up with an estimate, and it is smart to start factoring these costs into future retirement funding needs. Additionally, knowing how much is necessary to cover other living expenses will offer a clearer picture of how much extra savings is needed to cover any additional healthcare costs.
Figure Out How To Fill The Gaps
Many people have at least some form of retirement planning in place, such as an IRA or 401(k). Investing in these accounts will substantially help grow retirement funds, but it’s unlikely that it will cover all retirement expenses. These gaps will need to be filled through an alternative form of income.
Aside from Social Security and Medicare, a professional planning their retirement needs to determine where income gaps are and how they can be filled. The Balance suggests using a retirement calculator to identify how much will be needed over the course of retirement. Then, future retirees can use this information in conjunction with Social Security, Medicare and various investment earnings to determine how much to either save before retirement or generate during retirement.
Some options include working a part-time job during retirement or making a little extra on the side with a consulting business. However, many people plan on relying solely on their retirement savings despite increasing their leisure expenses. Every retirement plan will have gaps that require coverage; identifying and planning for this gap coverage will only bolster the financial safety net.
Continue To Network
Professionals in both their prime and in the twilight of their careers should be networking. Along with helping people grow their businesses and careers, a network should include professionals and organizations that can provide guidance up to and through retirement. It’s helpful to speak with other retired professionals about their unique experiences. Some may identify hidden expenses most aspiring retirees haven’t planned for, while others may offer tips for ways to reduce expenses, such as switching health and car insurance or other service providers to those who offer discounted rates for retirees.
Most importantly, all professionals in the CRE industry must remember that retirement is an achievable goal. All working professionals can live comfortably and contently when their careers come to an end if they put the time, effort and investment into a retirement savings plan.
This feature was produced in collaboration between Studio B and United Bank. Bisnow news staff was not involved in the production of this content.
Studio B is Bisnow’s in-house branded content studio. To learn more about how Studio B can help your team, reach out to firstname.lastname@example.org.