How to Plan for Your Ideal Retirement

Summary: Knowing how to plan for retirement means evaluating your savings, timing key decisions like Social Security and preparing for both financial and lifestyle needs.

Planning for retirement takes more than daydreaming about beach days. The more you prepare—financially and emotionally—the more likely you are to enjoy life after work.

Financial readiness for retirement

For most people, making sure you can afford to retire and won’t run out of money after leaving work is a primary concern when it comes to retirement readiness. Because so many workers will depend on their own savings and Social Security in retirement, they’re unsure about whether they can afford to retire. That means many people simply keep working, because that seems like the safest course of action. Meeting with a financial advisor to plot a financial plan can help ease those fears, and often reveals that you can safely retire earlier than you expected.

How to plan for retirement in your 50s

If you’ve never sat down with a financial planner, take the time to do so now. Collect all your financial documentation, and then discuss strategies for collecting Social Security and evaluate your retirement savings, life insurance, debt level and how long you expect to keep working. Now is a good time to set a financial plan for your last years at work and to balance your investments to minimize risk.

One suitable tool is Mutual of Omaha’s retirement savings calculator.

How to plan for retirement in your 60s

Assess the state of your health, career and finances so you can firm up when you’ll leave work and whether you’ll continue to work part-time. Discuss plans with your spouse, including retirement dates and your expectations about where you’ll retire and what your retirement lifestyle will be like. Consider using vacation time to “road-test” your retirement plans in the location you’ve chosen for retirement and the activities and retirement goals you’ll pursue. You may elect to receive Social Security at this time, or live off your savings and delay Social Security to increase the size of your monthly payments (see below for details).

You can check how long your savings will last with this Mutual of Omaha calculator.

How to plan for retirement in your 70s

If you haven’t done so already, meet with your planner and decide how you’ll structure your retirement account withdrawals, as well as Social Security and any pension payments. Creating your retirement “paycheck” is very different from the strategies for building your nest egg. You’ll also need to plan on how to handle minimum required withdrawals from tax-deferred retirement accounts that start at age 73. This is a good time to update wills, powers of attorney and estate plans, and to ensure others can access your documents and online accounts if needed.

You can get a picture of how long your retirement savings will last with this Mutual of Omaha tool.

Other financial considerations

Now that you’ve got the timeline down, here are some other financial considerations that you should look at as soon as possible.

When to claim Social Security

Many workers want to delay claiming their benefits in order to maximize their monthly payments, while others may need to claim benefits as early as they can. The trade-off with claiming your maximum available benefit at age 70 is that you either work longer or use savings to support yourself until that time. In other cases, retirees find that it’s better to take Social Security payments earlier while allowing their taxable investments the opportunity to continue to grow.

Balancing those risks and benefits depends on your health, family history and financial circumstances. The Employee Benefit Research Institute found that, while 33 percent of workers typically plan to retire at age 70 or older, only 6 percent manage to do so.¹

Here’s a picture of how your Social Security payments differ by age if you were born in or after 1960.

• Age 62–Early claiming means your payment is reduced by 30 percent.
• Age 67–Your full benefit amount.
• Age 70–You receive 124 percent of your full benefit.

Since maximum payment amounts can change from year to year, visit the Social Security Administration to see what this year’s monthly benefit at these ages. To calculate your actual benefits, check out the Social Security Administration’s planners and calculators.

Creating your retirement paycheck

Taking cash out after retirement is a very different situation from saving for retirement. An advisor can help you plan when to take cash from taxable or nontaxable accounts, how to help minimize the tax bite on your nest egg, and how to restructure your investments in an effort to balance inflation protection with safety for a retirement that can last as long as 30 years.

Lowering your taxes

Retirees can lower their tax bills by moving to one of the nine states that don’t levy state income taxes. Retirees who want to divide their time between two or more homes should be careful about taking the right steps to establish their tax residency in the lower or lowest-tax state.

You’ll find more information in this article: How to Maximize Your Retirement Plan with the Right Income Tax Strategy.

Your health and wellness

It’s natural and sensible to focus on your financial wellness as you approach retirement, but it’s just as important to consider your overall wellness. A broader approach includes making sure you can engage in activities that make you feel appreciated and content, along with taking care of your health and fitness just as carefully as you watch over your money. That includes preventive care, as well as lining up the resources you’ll need to stay healthy.

• Medicare vs. private insurance–You can qualify for Medicare coverage when you turn 65, which means reviewing several coverage options, starting with Medicare Part A, which covers hospitalization, and Medicare Part B, which handles medical costs. There are about a dozen additional coverage options, including Medicare Advantage plans, which offer coverage through private insurers. If you retire before becoming eligible, include the cost of private medical insurance in your retirement budget.
• Exercise and diet–If you were too busy to hit the gym or plan a balanced menu while you were working, retirement can give you a chance to form new, healthier habits. This kind of preventive care can help you avoid injuries and chronic conditions that otherwise could send you to the doctor.
• Handle the paperwork–To be completely prepared for health issues that can come up as you get older, get your health care documentation in order. This can include a list of current medications and medical records, as well as documents that allow others to give you help, including a Health Insurance Portability and Accountability Act (HIPAA) authorization form, a health care proxy, last will and testament, living will, and durable power of attorney paperwork.

Take control of your retirement future

Planning your ideal retirement is about building a life you look forward to living. Whether you’re in your 50s fine-tuning your financial goals, in your 60s getting serious about timing and lifestyle, or in your 70s structuring your retirement paycheck, every step you take helps ensure your comfort, security and fulfillment later.

Mutual of Omaha offers retirement calculators and professional advice that can help you feel more prepared, whether you’re wondering when to start taking Social Security benefits or how long your retirement savings will last.

FAQs

Q1: What’s the ideal time to begin retirement planning?

Start planning for retirement early—it’s never too soon, or too late! In your 30s and 40s, focus on building your retirement savings. Your 50s are a good time to assess your retirement nest egg and future needs. By your 60s, seriously consider when you’ll begin receiving Social Security benefits.

Q2: What’s the best age to claim Social Security benefits?

When to claim Social Security is a very personal decision. The full retirement age in the U.S. is age 67, and that is when you receive your full benefit amount. However, many people start benefits at age 62. This reduces the benefits to 70% of the full amount. Waiting until age 70 provides the maximum benefit: 124% of the full amount. But it requires patience and sufficient financial resources.

Q3: How do I know if I have enough saved to retire?

To find out if you’ll have enough saved to retire, estimate your expected expenses in retirement and compare those expenses with your expected income from Social Security, pensions, savings and other sources of income. There are many tools available to help you determine if you’ve saved enough for retirement. Mutual of Omaha provides retirement savings calculators to help estimate whether your savings, Social Security benefits and other income sources will be enough to support your desired lifestyle. A financial advisor can also help you tailor a plan for your retirement goals.

Source:

1. Employee Benefit Research Institute, 2023 RCS Fact Sheet #2: Expectations About Retirement, 2023

Disclosures:

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc., Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.  Mutual of Omaha Advisors is a division of Mutual of Omaha Insurance Company.

All investing involves risk, including the possible loss of principal, and there can be no assurance that any investment strategy will be successful.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Not all Mutual of Omaha agents are registered representatives or financial advisors.

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