2. Take inventory of yourself and your spouse

In my prior article, Take Inventory of Assets & Liabilities, we discussed your current financial situation.  Now we will focus on non-financial matters that will be important as you make plans for retirement.  There are two key questions that we will explore:

  1. Important ages that you need to know about
  2. Your expected lifespan

Important ages and expected lifespan

Ages

In the United States, there are some key dates that are important to know when it comes to retirement.  These are:

  • Age 59 1/2, this is the age at which you can begin making withdrawals from your IRA, 401k and other qualified savings accounts without incurring a 10% penalty
  • Age 62, this is the age you can qualify for early Social Security retirement benefits
  • Age 65 – 67, this is the age you can get full Social Security retirement benefits depending on which year you were born.  Visit the Social Security website to determine your full retirement eligibility age
  • Age 65, this is the age at which you are eligible for Medicare health coverage (Part A). You or your spouse (partner) must have paid your Medicare taxes for at least 10 years.  Visit the U.S. Department of Health and Human Services for more information.
  • Age 70 1/2, you must begin taking Minimum Required Distributions (MRD) from your qualified accounts (IRAs, 401Ks, etc.) but does not apply to your Roth IRAs.  Visit the IRS website for more information.

If you’re in your 40’s, you want to make sure that you are paying your Social Security and Medicare taxes so you can qualify for these benefits when you retire.  You’ll also want to maximize your contributions to your retirement accounts.  I know this can be tough at this age because you likely have lots of bills to pay for family expenses, home mortgage, car loans, and all of life’s other trappings.  Look at my articles in the “How to Make Money” section of NearingRetirement.com for ideas on how to extra money for retirement.

If you’re in your 50’s, there is a good chance you have been paying at least 10 years of Social Security and Medicare taxes.  These are the years you should be maximizing your contributions to your retirement.  However, these are also the years you’ll likely be paying tuition payments and helping take care of elderly parents.  It may seem that there is nothing left to set aside for your golden years.  My suggestion is to look to visit NearingRetirement.com for suggestions on how to supplement your income.

If you’re in your 60’s, you’re already thinking about life in retirement and, depending on your financial and health situation, it brings wonderful anticipation or dread and despair.  If you are feeling dread and despair then I hope the information on this site can help you discover ways that will make your retirement more enjoyable and truly a time to look forward to.

Expected Lifespan

How long will you live?  It’s difficult to confront one’s mortality and try to calculate the day when one will die.  Nevertheless, knowing how long one is likely to live is important when calculating your retirement needs.  This information can be used to determine how many years you will need to have money to live on.

One of the best tools to I’ve discovered to help you calculate how long you’ll live is available at the Northwestern Mutual Life web site.  This calculator is very easy to use and doesn’t require that you provide your name, email or any other nonsense like that.  You simply answer some very easy questions and in about a minute you get your answer.  Click here to start using the lifespan calculator.

Now that we know your expected lifespan, we can start figuring out the number of year’s you’ll be in retirement by subtracting your desired retirement age from your expected lifespan.  If you lifespan is 85 yrs and you wish to retire at 65 then you know that you’ll need income for 20 years.

Next article will be about defining what retirement means to you.  What do you enjoy doing in your spare time?  Reading?  Riding a bicycle?  Hiking, Watching movies?  Taking long walks on the beach?  Spending time with friends & family with occasional travel?  Volunteering at an animal shelter?  We will create a list of the things you enjoy most and analyze them to see how we can begin building your ideal retirement.

Thanks,

Steve
NearingRetirement.com

P.S.,  Please leave a comment below with your thoughts.

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