One of the most common questions asked by those in their 50s and 60s is “Do I have enough money for retirement?” It’s an important question, but it shouldn’t be the only consideration when weighing retirement. You also need to ensure you have a plan in place to secure those finances throughout retirement.
This article provides a simple way to find out if you have enough to retire, and then offers a surprising tip on how to ensure your finances are secure.
How to find out if you have enough retirement savings:
- Add up your savings and retirement accounts. We’re off to a simple start, right?
- Most financial experts will say to apply the 4% rule: Planners say you can withdraw roughly 4-4.5% a year from your accounts without outliving your money.
- Factor in social security payments (the Social Security Administration’s website has a retirement estimator) and pension payments, if you have one.
- Add it all together.
- Figure out what you spend. Most experts say you need 75% to 85% of your final pay to maintain the same standard of living. (But if you’re still carrying a mortgage, you may need 100%)
- Subtract to find out the difference between your income and your expenses. Be sure to allow for taxes!
OK, now you have your results. In the negative? You’re not alone, but there may be a way to bolster your retirement fund. Before we get to that, ask yourself two additional questions:
- Do I plan to stay in my home? Even if you’re mortgage free, there’s no such thing as a free home. Consider the unexpected expenses of home ownership - Click here to learn more.
- Have I planned for my future health care needs? This includes who will take care of you if the need arises.
CCRC retirement communities that offer an extensive contract provide residents with unlimited, lifetime access to independent living, assisted living and skilled nursing care with little or no increase in the monthly fee as the result of a need for a higher level of care. Communities with these life care plans provide fundamental peace of mind. Instead of worrying about if you have enough money to last your retirement, you can enjoy everything about your retirement lifestyle more fully.
Benefits of a CCRC Retirement Community Include:
- Tax savings. You can take a one-time tax deduction on your entrance fee, plus your monthly fees may qualify for annual deductions. Both deductions vary slightly each year, but average near 40%!
- Saving on tomorrow’s long-term care by prepaying today. With an extensive contract, your entrance fee and monthly fees prepay any long-term care you will ever need, for as long as you need it. Plus, your fees will never increase solely based on your need for a higher level of care. Assuming a conservative increase of 4% per year, in 10 years an average nursing home stay could cost more than $350,000 for a single person, and more than $700,000 for a couple.
- Your nest egg is protected. With life care plans, long-term care is prearranged by your entrance fee and monthly fees. No more home maintenance bills or unexpected expenses – they’re completely predictable.
- Your household expenses are covered and predictable. Studies show that homeownership costs are nearly $2,000 a month, above and beyond any mortgage payment. This doesn’t include unexpected major home repairs. Under an extensive contract, you simply pay a fixed monthly fee that covers most expenses pertaining to your residence. Plus, your fee includes meals, full amenities and services, clubs and activities, plus any long-term care you may need.
- Non-profit CCRCs can reinvest resources in you. Non-profit retirement communities are not beholden to investors and do not answer to the stock market. After they pay operating expenses, revenue is often invested back into the communities.
- You’re protected against future financial hardship. Some CCRCs have financial safety nets for residents whose financial resources become exhausted due to an unexpected and unavoidable hardship.
Your first question at the beginning of this article may have been, “have I saved enough to retire now?” Hopefully now a quick follow-up is, “How do I make a sound investment in my future?” The right CCRC retirement community can help you do just that.
Search our 23 retirement communities to find an Acts Retirement-Life Community near you.