Retirement planning may seem like something that is not necessary, because there is a societal plan already in place. Throughout your life, you earn retirement credits when you are paying taxes. As a result, you will qualify for Medicare at the age of 65, and you will start to receive Social Security when you reach the age of eligibility.
Your confidence may be further bolstered by the fact that you have been contributing into a 401(k) plan through your place of employment.
While the above may be true for many people, proactive retirement planning is essential if you want to be in a position to put your working years behind you as you begin to cross all of those things off your bucket list. Here’s why.
The exact amount of your Social Security payout will depend on the amount of your earnings during your 35 highest earning years. If you want to find out exactly how much you can expect to receive, you can register your account on the Social Security Administration website.
Each year these figures are adjusted as different people come and go from the Social Security rolls, and there are modest cost of living increases. However, during the 2015 calendar year, the average monthly payout for a single Social Security benefit recipient is $1,328. For a couple when both people are receiving a benefit, the average is just under $2,200 per month.
Clearly, if you are depending on Social Security to provide you with the financial resources that you will need to enjoy your spare time to the fullest, you may be in for an unpleasant surprise. This is one of the reasons why retirement planning is important.
You may think about the utilization of your 401(k) account, but do you really want to use the assets in the account to pay for your day-to-day living expenses? Ideally, these resources should be there for you to fall back on in the event of unforeseen circumstances.
Speaking of unforeseen circumstances, Medicare will provide health insurance. However, there are out-of-pocket expenses that you must deal with on your own, and they can be considerable under some circumstances. People who reach an advanced age are often going to need frequent medical care, so you may be looking at significant ongoing expenses as a senior.
There is also the matter of long-term care. Medicare does not pay for living assistance, and most seniors will need it. This is a harsh reality to contend with, because the average cost for a year in a private room in a nursing home is over $90,000 annually.
Retirement Planning Consultation
If you can see the value of retirement planning after absorbing this information, send us a message through this page to request a free consultation: Indianapolis IN Retirement Planning Attorneys.
Mr. Kraft assists clients primarily in the areas of estate planning and administration, Medicaid planning, federal and state taxation, real estate and corporate law, bringing the added perspective of an accounting background to his work.