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As you age your loved ones are likely to bring up a discussion of your retirement. But what exactly does retirement involve and how do you do it? For starters, retirement is not the same for everyone. The general belief is that when you retire you stop working and enjoy leisure for the rest of your life. However, according to the Pew Research Center, this is not the case.
As of 2016, nearly 19 percent of adults over 65 worked part or full time. This accounts for 9 million retired age individuals and is an increase of 6 percent just from 2000. The Great Recession played a major part in this scenario, mainly due to a decrease in investment income and loss of retirement savings for this age group. The most common types of jobs held by retirees are management, sales, legal, personal care/service, and community and social service occupations.
According to these statistics, one in five seniors over age 65 will remain employed to some degree. This changes in the instance that a senior is no longer able to work in their career field, either due to physical restrictions or medical conditions. In this case, seniors often find themselves in need of in-home or private care facilities to help with the essentials, such as making meals and transportation.
For seniors who remain employed, there is a big question of when they should start drawing their Social Security income. The reason being, seniors who start taking Social Security while working may see a decrease in the amount they receive. Also, the age you start receiving Social Security also determines how much you will receive over the course of their remaining years. Here is a quick guide to help determine when to start getting Social Security retirement benefits:
Optimally, you will wait until you are 67 to start receiving Social Security income. However, if you are unable to work and dependent on this retirement benefit, then it can be a good idea to start drawing Social Security at 62. This all depends on your financial situation and whether you want to continue working, i.e., you have a career in which you feel confident and secure or own your own business and want to remain at the helm.
Another age-related retirement question involves withdrawing from a 401k or IRA. If you have either of these retirement plans, then the goal is to have this money accessible during your retirement. However, as with Social Security, if you withdraw money too early it can jeopardize the amount you receive.
Generally, most retirement plans allow you to start withdrawing funds penalty-free when you are 59 1/2. However, you can wait until you are 70 1/2 to start taking these distributions, which can help you make more money off of your investment portfolio. If you take distributions before you turn 59 1/2 there is the tax penalty to deal with. You will be assessed a 10 percent penalty by the IRS in the form of income taxes when you file your tax return.
Budgeting for your retirement helps you avoid early withdrawal of either Social Security or your retirement plans. If you set a monthly budget for your basic necessities, including your housing, food, transportation, and medical care, you can avoid spending more than you have. One way to reduce your expenses is to liquidate your personal belongings, properties, and/or housing.
If you have spent the past 50 years in a six-bedroom house, but are now living alone, then it is often a good time to downsize. The money you make in selling your larger home can be put to good use in terms of budgeting for retirement. Other liquidations include automobiles, appliances, equipment, and antiques that you no longer need or want. If you would prefer to leave these types of items to your loved ones, then now is the time to create a will.
Visit your attorney to have a will made out that covers all of the items you own, so you can rest assured these will go to the people you want to receive them. By having a will you also reduce the amount of money and time that your inheritance will be tied up in probate court, while also relieving your loved ones of this process.
For seniors who are downsizing, one viable option is to move into a retirement community. When considering a type of retirement community that best suits your lifestyle and needs, there are several to choose from.
There are also senior living communities focused on particular medical conditions and health needs. These range from senior housing for Alzheimer’s and dementia patients, to housing for diabetics and obese seniors. The options for care range from continuum care retirement communities that offer specialized care at various stages of the end of life, to adult day care facilities offering short-term daytime care.
Quite simply there is a senior living community for most types of seniors in the US. The goal is finding a senior home environment where you feel most comfortable and have the most needs being met. However, for every type of senior living experience there is the overall cost to consider.
In many instances, the bottom line for choosing a senior living community boils down to how much it will cost. The expense of senior housing can easily be the breaking point for deciding where a senior will live. Fortunately, there are ways to bypass finances so that the senior can choose a housing situation or community where they feel most at ease and receive the most applicable care.
The first place to go to receive help with paying for senior living is insurance. Seniors who have long-term care insurance will be set up to use this money to pay for housing in a senior living community. Additionally, long-term life insurance policies can often be cashed in, albeit with a penalty, to help pay for living expenses.
Most often a senior will depend on Medicare to cover living costs. Medicare is the senior health care program available through the federal government. It provides all seniors over the age of 65 with social insurance. This insurance covers everything from primary care visits and home health services to senior living. With Medicare you can secure financial benefits to help pay for the following:
If you are a low-income senior you may also be eligible to receive Medicaid. This is a social insurance program available to all ages based on income requirements. For income-based senior housing you may be able to use Medicaid and Medicare to cover expenses.
For seniors who have had the financial ability to save for retirement, there is the viable option of using a 401k retirement plan or IRA fund to pay for senior living. These retirement plans, as noted, allow you to receive money at a certain age without penalty. The money earned in a 401k or IRA increases in interest over time. Therefore, the longer you wait to withdraw from these retirement plans for seniors, the more money you may have to use for paying for your senior living needs.
Seniors who have multiple sources of savings and benefits typically pool these together to see what they have as a whole. This often involves a delicate balance of withdrawals based on age limits. In addition, if you are still able to work, then you have to balance how much money you can make so to receive the most from your Social Security income. Ideally, you will have a financial planner or a trusted adult who is experienced with senior budgeting to assist you with making these financial decisions. These are financial decisions that will impact you for the rest of your life, and 99 percent of cases you have a finite amount of funds. The goal is to find a way to stretch these funds to their limit without sacrificing on the quality of care.
Whether you choose to live in a senior apartment, independent living or assisted living community, you want to be able to remain active and viable within your community. The common misconception is that seniors are not able to be active. However, that is the wrong idea to have about retirees. In fact, according to Novant Health staying active and socializing is a vital part of self-care for seniors. This allows seniors to maintain good emotional health, cognitive function, and physical endurance. Additionally, with healthy social interactions seniors are able to protect themselves against illness thanks to the natural immunity support.
Being engaged and active as a senior sends endorphins, which are feel-good hormones, to your brain to help you relax and be less stressed. This, in turn, helps to protect your body against the negative effects of stress, such as lowered immunity, increased resting heart rate, and the build-up of plaque in your arteries. As a result, you feel better physically, emotionally, and mentally—all of which helps to keep you healthy and young at heart.
Yet as a senior there can be limitations on the physical abilities you have. For example, you may not have the stamina to go and run a marathon like you did when you were 32. You may have limited lung capacity or lack of muscle density, or be at risk for bone breaks due to osteoporosis. Therefore, you may need to tailor your senior living lifestyle to best accommodate your current health and wellness.
Some examples of low impact, beneficial activities include golfing, nature walks, bird watching, or going to an exercise class for seniors. However, you should not limit yourself simply to physical activities. To get these same benefits consider volunteering for an organization or charity you care about. This allows you to remain active and social without putting a great deal of stress on your physical body.
Another idea is to pick up a hobby or craft, such as quilting, photography, painting landscapes, or putting together puzzles. These activities help to keep your mind sharp while honing your fine motor skills and connecting brain cells. It also gives you the chance to join like-minded seniors who share the same interests.
So far you have learned how to handle your finances to pay for senior living. You also have a thorough understanding of what kind of senior living communities are available. Now it is time to answer the question: How do I choose the best retirement communities near me?
As noted, there is an extensive array of senior living communities in the US. To help you narrow down the options, we have listed some questions you can ask during the process of finding retirement communities near you:
Finally, as you decide where you want to live, there is one more valuable tip to consider. You have the ability to negotiate the price you will pay. Most seniors do not realize this and go with the posted price without question. Additionally, there may be discounts or special offers that you can take advantage of. Ask about these offers to see if there are any future or ongoing options. You may be able to delay your move to a senior community for a short duration in order to take advantage of seasonal discounts. It never hurts to ask. Plus, you may be able to reduce the costs of senior living to help you get more out of your financial capabilities.
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