On the Road to Retirement? Watch Out for Roadblocks

On the Road to Retirement? Watch Out for Roadblocks

Retirement should be a welcome reward for long years of hard work. However, unless you prepare now, it might not be the bed of roses you had hoped for.

Think of retirement as an old-fashioned fold-out map that will help avoid wrong turns, like not taking an employer-match for your 401(k), overlooking major costs in retirement like healthcare and forgetting what your dreams for retirement once were. Be aware, says Kiplinger, of “The 5 Biggest Retirement Mistakes to Avoid.”

Not having a strategy. The best sports teams don’t go into games without a plan. Retirement is no different, except that it’s more important for you personally than your favorite team’s success. Setting goals and creating a strategy before and during retirement is the best way to achieve the retirement you want. The choices made in the years leading up to retirement can impact finances for the rest of your life. It’s also complicated. You need to minimize taxes, maximize Social Security, chose a Medicare plan, get your estate planning done and figure out how all these elements can work together in the best way. A retirement may last one, two, three, or more decades. It requires planning.

Not maxing out on tax deferred savings. Not taking advantage of tax-deferred 401(k) and IRA contributions can be a huge mistake. The same goes for not participating in a plan when your employer generously matches your contributions. For 2019, you can contribute up to $19,000 to a 401(k) if you are under 50, and as much as $25,000 if you are 50 plus. For IRAs, the limits are up to $6,000 if under 50 and up to $7,000 for those 50 and up. Contributions are not taxed, so you can save for retirement and reduce your tax bill at the same time. Just remember that the money is taxed, when it’s withdrawn.

Neglecting to adjust investments before retirement. Protecting your nest egg from market volatility is easier said than done, especially in recent weeks. However, it’s a worthy goal. When you have a long time to recover from market volatility, the bumps, big and small, don’t mean so much. However, if you retire just as the markets crash, that can impact the entire rest of your life. You can’t predict markets, or eliminate risk, but you can take some measures to decrease your risk exposure, like diversifying a portfolio.

Forgetting health care costs. This is the retiree’s biggest fiscal nightmare, and a big unknown. You could be totally healthy when you retire, and six months later suffer a health a crisis. Good health is worth an investment. However, Medicare only covers a certain amount of health care needs, and it’s not free. Part B premiums can be as much as $460 for high income earners, and many retirees purchase additional Medicare Advantage or Medigap plans. A couple retiring at 65 today should expect to pay an average of about $400,000 in health care over the course of their retirement. This doesn’t include long-term care, like nursing home care.

What about your life? Planning for retirement is not all about money. Long before you retire, think about what you’d like to accomplish during this time of life. Do you want to travel, contribute to your community, go back to school, spend more time with your family, or create a legacy? Ideally, personal goals will dictate financial goals, and not the other way around.

Reference: Kiplinger (Sep. 4, 2019) “The 5 Biggest Retirement Mistakes to Avoid”

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“On the threshold of retirement, we finally decided to quit thinking we could self-prepare the requisite documents. We had previously had only a very simple will. We needed the necessary legal (including updated will) & health care docs but didn’t want to deal with the time & complication of legalese. Cindy made the process relatively painless. She took the time to explain and answer questions without trying to upsell services. We were done in 2 meetings plus the reading of emailed drafts. In addition to preparing the documents, Nelson Eldercare will be there when our adult children need advice on executing the plans we’ve put in place.So glad it’s behind us and would recommend Cindy and her helpful staff.”

- Bonnie

Cindy and her company treat their clients like family. Nelson’s offers clear, direct, and honest guidance in planning for your families security and future. No one wants to actively sit down and make these decisions, but Nelson’s makes this process seamless. I was so impressed with their willingness to answer all questions big or small. So glad I made the decision have them help my mom and dad and now me. You can’t go wrong with Nelson’s Elder Care Law.

- Hope

The very best elder law attorney and staff anyone could ever ask for! I have referred a number of clients to Cindy and she never disappoints. She is kind, caring, and extremely thorough in making sure everything is completed as it should be. I highly recommend Cindy for anyone needing lawyer services; she truly goes above and beyond for every client she helps and has had a huge impact in so many peoples’ lives. Thank you, Cindy and staff, for everything that you do- I’m so glad to know you!

- Kerri

I heard Cindy’s presentation at a Senior Luncheon at my church, and was very impressed. She helped my daughter and me understand many aspects of elder law. Josh has also been very helpful in my planning to enter an independent living situation . I have told many friends about them.

- Charlotte

Cindy and the Nelson Elder Care Law team are trustworthy and helpful. They are the experts in elder care law. At Leaf Cremation, we entrust our families to the care of the Nelson team when their services are needed.

- Pierce