Get Your House In Order Now To Save For Retirement Later
The last thing anyone wants to hear right now is more bad news about the economy. Gasoline prices have been getting lower, but we might be on track for a recession next year. Everything else is still prohibitively expensive. If you are on an income-based repayment plan, then the $10,000 of student loan forgiveness might not reduce your monthly payment, or even the total amount that you have to pay. Most Americans live paycheck to paycheck, even if their employment income exceeds $100,000. You might have adopted the coping strategy of letting all the bad news go in one ear and out the other, especially if you have a steady job with health insurance benefits and a retirement account to which your employer matches your contributions. In a recent article on Yahoo Finance, personal finance writer Suze Orman advises mid-career employees not to rest on their laurels about their financial situation. She says that, if you look carefully at your monthly contributions to your retirement amount and take a realistic view of what your expenses will be after you retire, you are probably not on track for a very comfortable retirement. A Tampa estate planning attorney can help you get a more detailed view of which expenses will really be necessary in your old age.
Aging in Place Begins in Middle Age
The decision to stay in the house where you have raised your children or move to a less expensive one should happen earlier than most people get started on it, according to Orman. There is no one-size-fits-all answer about whether you should continue living in your empty nest after you retire, but whether you choose, you should act accordingly. If you decide to age in place in the family home, then your first priority should be to pay off your home mortgage well in advance of retirement. If you decide to move to a tiny house, or at least one that is smaller and less expensive than your current one, move as soon as you can. The longer you keep the proceeds of the sale in savings, the more interest they will accrue.
Your Retirement Account Is Probably Only Big Enough to Act as an Emergency Fund
The same Yahoo Finance article includes a statistic that estimates the average retired person’s annual expenses at $46,000. Based on that estimate, how many years of income are currently in your retirement account? Probably not very many. According to Orman, most retirees in their 50s have only saved enough money for three years of retirement. She thinks that you should build an emergency fund with three years of expenses, in addition to your retirement account. Paying off your mortgage or selling your house is a good way to free up funds for this endeavor.
Contact David Toback With Questions About Retirement Expenses
A Central Florida estate planning lawyer can help you act now to reduce your retirement expenses and increase your retirement income. Contact David Toback in Tampa, Florida to set up a consultation.