Frequently Asked Questions You May Have If You Just Retired
You have most likely engaged in at least some retirement planning during your working life. You probably asked a lot of questions about how much you should save and even more so, how you can maximize your retirement resources. Once you finally reached retirement, you did not suddenly run out of questions. In fact, the dramatic changes to your lifestyle may have sparked even more.
When you actually experience retirement, your situation and even your perspective will probably change. With that in mind, look at some of the most common questions about starting retirement.
Q: Is Downsizing My Home the Ideal Option?
It’s sometimes tough to decide to trade a larger family home for a smaller house or even a condo or apartment.
Drawbacks of Downsizing Homes
Some drawbacks to downsizing might include moving away from neighborhood friends or nearby family members. Moving, updating the home to sell, and acquiring a new dwelling may also require an investment in both time and money. Even scaling down possessions to fit inside a smaller dwelling can pose a challenge. To help with that check out this article for tips from real estate downsizing pros.
Advantages of Downsizing
On the other hand, some of the many advantages of trading in a large house for a smaller dwelling may include:
- Get relief from navigating and managing a large house: As an example, retirees may prefer a one-story house over a two-story home, so they don’t have to climb stairs several times a day. Also, retired people may not care for the labor and expense involved in maintaining large lawns and landscaping.
- Free up cash and lower bills: Cash from the sale can potentially go into your retirement funds to help improve your retirement security and income. A smaller dwelling typically also comes with lower maintenance, utility, and insurance costs to reduce monthly bills.
Q: Should I Get a Part-Time Retirement Job While I Can Still Work?
According to a recent USA Today article, about 67 percent of Americans say they plan to work even after they retire from their main career, even if it’s just part-time. Working longer can offer some advantages. These include:
- Extra income can supplement your retirement savings.
- Some people may benefit by deferring social security for higher monthly payouts. Check with your financial adviser if that’s a good idea for you.
- Some jobs may also provide benefits that will help reduce bills.
- Of course, lots of folks choose to find at least a part-time job or side business to keep them active and engaged. They may enjoy starting a retirement business and enjoy socializing with people at work.
Of course, nobody can absolutely predict when they’ll need to retire because of an infirmity or disadvantageous job market for their age and skills. Others just feel that they have earned the time off to travel and enjoy non-work activities. While many people work beyond their normal retirement, the focus should be on creating sustainable income to support your retired lifestyle.
Q: Can I Still Afford Charitable Giving After Retirement?
Retirement does not have to mean people stop supporting worthy causes; however, it is wise for retirees to plan for giving the same way they plan for any other expenses, including food, healthcare, and housing.
A CBS News published a study found that most groups of retired people maintained their charitable giving at the same levels as before they retired
As mentioned on the Save the Children blog, charitable giving may even have some surprising health benefits, including improved self-esteem, lower risk of depression, and of course, contributing to better communities. Retirement certainly doesn’t translate into giving up on these positives.
Be sure to ask your financial advisor how you, as a donor, can support your favorite charities in ways that best maximize the tax advantages of giving for your situation.
Q: Will Social Security Run Out of Money?
According to Social Security, the program’s current funding will stay intact until 2037. Even after that, they predict that payroll taxes can account for 76 percent of funding. By that point, Congress may decide to take one of these actions to fully fund Social Security for at least another 75 years after 2037:
- Reduce overall benefits by about 13 percent
- Increase payroll tax rates by two percent
- Means test the benefits with graded benefits for high-income earners
It’s impossible to predict what decisions legislators will make about Social Security in the future. That’s why prudent retirement planners will also have other sources of retirement savings and income.
Overall, it’s ideal to budget for retirement savings, so you don’t have to only rely on Social Security.
Q: Is a Will or Revocable Trust enough for my Estate Plan?
Often when people think of “estate planning” there is a belief that preparing a Will or Revocable Trust is all that is necessary to complete a plan. Although these documents are important to dictate the transfer of assets at death, there is more to consider. What about your wishes while you are alive? What if you were to become seriously ill or incapacitated?
ADDITIONAL LIVING DOCUMENTS TO CONSIDER
Additional living documents are needed to designate your wishes regarding how your finances and healthcare decisions should be managed.
These documents include:
- Financial Power of Attorney
- Advanced Medical Directive
- HIPAA Authorization forms
In addition, if you have minor children, Designation of Standby Guardian documents are necessary to specify who will care for your children until you can again assume your parental duties.
If you are unsure whether your documents are complete or up to date, consider reviewing them with an attorney. It is recommended that you review them every few years to assure they current with your wishes and any changes in the law.
Lastly, many people don’t think about writing a love letter to their family. We have a blog post on the topic of leaving a legacy and have included downloadable templates that are easy to use. Check it out here.
Q: How Can I Stay Current with Changing Rules to Maximize Retirement Savings?
The biggest challenge retirees face stems from having no clear way to predict how long retirement will last. People turning 65 this year have at least a 25-percent chance of enjoying their 90th birthday party. Just as nobody can predict how long retirement might last, retirees also face the challenge of estimating future healthcare and living costs. Just as impactful, economic climates and legal rules might change that can affect taxes, withdrawal rules, and incomes.
Few retirees can keep up with changing rules and marketplaces. On the other hand, prudent folks can benefit from the right financial advisor. High-quality financial advisors succeed by keeping up with and providing their clients with the information that they need to make the best financial choices during changing situations.
Here’s the good news. The financial planners at Medallion don’t just serve people who still work at their full-time jobs, they also help support retirees with tested solutions and real answers to common retirement questions.
To learn more, check out this brief guide to choosing the right financial advisor. Medallion Financial Group offers a free consultation to help explain how our personalized services can both simplify and strengthen retirement plans. You can use that meeting as an opportunity to ask all of your retirement questions with a trusted advisor.
For over 30 years, federal employee retirement planning has been a key focus of Medallion Financial Group. We recognize that FERS retirement benefits have extra layers of complexity, such as the Thrift Savings Plan (TSP), 401K, Pension plan, FEGLI and more. It’s easy to get lost in a sea of bad advice when so few people understand the basics. We help with the basics and beyond to enable our clients to get the education and advice they need to retire with confidence.
Our focus is twofold: first and foremost, we are fiduciary advisors. We stand against any violation of laws, values, and ethics. Second, we treat our clients as part of our family, not only those who call Maryland and Georgia home, but clients across the US who have benefited from our reputation of personal service, integrity, and expertise.
We strive to exceed client’s expectations – because we have high expectations of ourselves.