If there is one financial question causing stress to nearly everyone in the U.S, it is that of retirement. Most people in the country are worried about whether they would have sufficient funds to support themselves once they stop working.
Fortunately, even if people are low on savings, they can manage to enjoy a comfortable retirement, given that they avoid some very common retirement –saving related mistakes. Here are four moves that can help you feel at peace with your financial status post-retirement:
- Use catch-up contributions
Once you reach the age of 50, it is time to utilize catch-up contributions found in numerous tax-exempted retirement plans. As per the existing law, you can keep aside an extra $6,000 in your 401k, in addition to the maximum limit of $18,500 for individuals under 50. Also, it doesn’t like any impending tax overhaul in the Congress would end up modifying the tax operation of such savings accounts.
- Get some insight on mortgage management
There are a few debts which need prioritization before your retirement. These include student loans and credit card payments. However, once these high-interest loans have been paid off, it is important to give due thought to the mortgage. Also, in some cases, it is better to avoid retiring home loans. Even though it is best to have minimum debts in retirement, people should not tap into their retirement savings in order to quickly pay off a loan. This would mean losing an investment which offers up to 7 percent returns annually and trading it for home equity that would probably have a very low appreciation rate.
- Have a discussion on long-term care
There are many reasons why one should have a family discussion on long-term care before retiring. Long-term care is among the most important expenses in later life. Reports suggest that there is a 52 percent probability of needing increased long-term care post 65 years of age. Also, the average expense incurred on renting a private nursing home room is currently more than $92,000 per year.
- Do a pilot testing of the retirement budget
Retirement experts suggest that it is a good idea to try and live on the anticipated budget (afforded by the retirement savings) a couple of years before the actual retirement. This would be like a test to know whether the saved funds are sufficient for the desired post-retirement lifestyle of the individual.