Retiring soon? Score big with the right retirement planning moves!
If you are retiring soon, there are a number of important changes and updates in 2016 for retirement planning.
If you are in your 50s, 60s 70s today, you are likely to live longer than your parents.
Baby Boomers are the first generation to enjoy the fact that a large number of Americans are living noticeably longer and healthier lives. That’s, of course, a great thing. But it also means that retirement planning is more important now than it’s ever been.
With so many people shifting over into retirement life, and so many of them expecting to live there a long time, changes that affect retirees have a broader impact now.
Find out exactly how long your financial resources will last with the NewRetirement retirement calculator. It was recently voted the “Best of the Web for Retirement Planning” by the American Association of Individual Investors (AAII).
Retirees have long been able to draw Social Security benefits based on a spouse’s benefit. As for singles, they’ve had some special Social Security flexibility, too. But not for too much longer.
Social Security “file and suspend benefits” will change in May.
Married people over the age of 62 have had the ability to file for Social Security, then suspend it but enable their spouse to start spousal benefits. This was a trick married people could legally use to increase benefit payments. And, single people have been able to file and suspend which gave them flexibility to retroactively claim benefits.
As of May, both of those options will be gone — poof!
If you are 62 or older now or will be 62 by May 2016, you should seriously consider taking advantage of these file and suspend strategies before they are no longer available.
Contact your Social Security office, or learn more online.
With record numbers of Americans retiring, Medicare has sought to establish new ways to keep the system balanced in terms of costs, quality of benefits and access for the people who need it, says the Associated Press Ricardo Alonso-Zaldivar at PBS.
Until recently, Medicare has been a dependable health care plan for retirees. Now, the viability of the program has taken on a new importance. With greater numbers of health interventions available, healthcare costs being higher and a lot more people retiring, it is unclear if the federal government will be able to afford the Medicare health bill for baby boomers.
A few of the Medicare changes for 2016 include:
- Preventive services are getting more attention now, as that helps reduce the risk of more significant health problems as Baby Boomers age.
- Creating a smoother transition from hospitals back into the home again is growing in importance, too. “Coordinated care” could help reduce costs for both the Medicare program and its recipients, as a broader team of health care professionals should work together to offer services to an aging population.
- End-of-life counseling, which was highly controversial when first introduced, will enable Medicare to pay medical professionals to offer counseling services for planning late-life medical care. The focus of end of life counseling is on quality of life — not on limiting choices.
Interest rates can be a mixed bag for retirees. High interest rates can be good for investments but bad if you borrow money or if you are worried about inflation.
Interest rates have been at record lows for the last 5 years or so but that trend may be shifting.
There was a lot of talk last year about the Federal Reserve finally taking the artificial cap off its federal funds rate, which had been in place as a means to help stimulate a lagging economy.
Some people braced for skyrocketing rates, which didn’t happen. But the cap did come off, and interest rates really are going through fluctuations. Of course the Federal Reserve doesn’t set interest rates for consumer financing, says Marcie Geffner for Bankrate. But it does set a trend that consumer financing typically follows.
Along with the worry about financing rates shooting upward is a trend and a hope toward a higher returns for investors. The “Sweet spot for investors,” as Blue Haven Capital portfolio manager, Donald Cummings, explains to Geffner, is in immediate maturities. “With the (10-year) at 2.3 percent, I’m still in the 7- or 8-year maturities. But if we get to 2.5 percent or 2.75 percent, I can go out into the 10-year or 12-year sector because them I’m getting compensated for going out,” says Geffner.
Certificates of Deposit, or CDs, are also expected to get a boost. by the end of 2016, a 3-month CD could experience an increase from 0.23 percent to 0.48 percent. Shorter-term CDs are expected to improve as well.
Improving rates aren’t likely to fall out of the sky, though, not according to Bankrate chief financial analyst, Greg McBride. Although rates are predicted to improve and keep getting a little better, shopping around for a better rate is still the best policy. Investors may or may not find those better rates otherwise.
Inflation is defined as an increase in the costs of goods and services. When inflation rises, things cost more and your dollar buys less.
Inflation is not good for retirees. When you are working, your wages generally increase to keep pace with inflation. However, retirees who depend on savings to make ends meet do not have an equivalent pay bump.
Until very recently, inflation rates were forecast to remain stable or very low. However, investors have begun to see signs of inflation.
Social Security benefits will increase with inflation, but retirees will want to look at other ways to keep pace with rising costs.
The NewRetirement retirement calculator enables you to play with inflation numbers to assess how they will impact your retirement security. You can enter optimistic and pessimistic inflation rates and immediately see how it impacts your lifestyle and savings drawdowns.
If you are retiring soon, it is more important than ever to have a really good retirement plan.
The good news is that online resources can make planning easier than ever.
The NewRetirement retirement calculator is a very detailed and sophisticated tool, but it makes retirement planning easy. Best of all, you are in charge of your own plan. You enter your own information and make your own decisions about priorities and how to make ends meet.
- While most retirement calculators are focused on how much savings you have and how you invest that money, the NewRetirement retirement calculator gives you many different levels for improving your financial security:
- How much will you spend at different times in retirement?
- Will you tap home equity? Will your home value increase or decrease?
- What do you think will happen with inflation?
- Will you need long term care?
- What financial impact will loved ones have on your retirement?
- Do you want to leave behind a financial legacy?
- And more…
These factors can impact your retirement much more than investment returns.
