Avoid Costly Retirement Surprises

Retirement planning to estimate resources and individual needs is necessary to avoid surprises. It is an important preparation for the way of life after retirement. Saving and investing are the keys to avoid retirement downfalls. Various tools must be used to save for retirement like 401k, IRA, bonds, securities, mutual funds, and stocks. Prepare to retire in a healthy, happy, exciting and fulfilling way by following the steps listed here.

1. Follow several investment plans. Diversify financial saving accounts to have enough retirement money. Invest in multiple venues to lower risks and secure a better life at older age. Future retirees must not only plan for how their leisure time will be spent like going on vacation or visiting golf clubs, but on the overall lifestyle expenses. All planning should be for at least 20 years of retirement life, but prepare to cover more years. For example, save emergency money to account for unexpected medical conditions.
   
2. Prepare for rising health care costs. Health care coverage is one of the main challenges for retirees. Research done by the Fidelity Investments Company says that a 65 year old couple spends $400,000 in average of their own money by the age of 92, not counting costs for long term medical conditions. Furthermore, Medicare costs are higher than what retirees originally considered. For instance, traditional Part A of Medicare provides inpatient care in hospitals, hospice, skilled nursing access, and home health care free. However, premium charges apply for Part B and Part D of Medicare that cover outpatient services and medications respectively. To avoid paying these added charges, a private Medigap (Medicare Supplemental Health Insurance) coverage is available for approximately $6500 a year. Health care takes a big chunk out of retirement savings.
   
3. Know about Social Security taxes. Approximately 85% of all Social Security benefits are taxable to couples with income of $32,000 or higher. Although taxes are paid throughout working years to provide funds to the Social Security, taxes apply on its benefits too. Moreover, taxes also apply to preretirement savings accounts. For example, money that is taken out of a 401K or traditional IRA plans are taxable at the person’s highest tax rate up to 35%. Retirement savings options that can be accessed tax free is a Roth IRA.

Research and strategy are needed to live a comfortable life during retirement. Many saving plans are available that should be followed at the earliest possible age. Think about where you picture yourself in the future and how to get there. Avoid further surprises during retirement, by using the official U.S. Social Security Administration’s website which provides estimates and calculators on various topics to assist Americans reach the most comfortable retirement life possible.

This article is provided courtesy of Credit Season UK, a consumer finance website providing information and resources on payday loans and other personal credit services.