Some costs could rise, fall or even
disappear.
Provided by Benjamin
Bogetto
Your retirement may seem near at hand or
far away, but one thing is certain: your future will differ from your present.
Financially, that fact is worth
remembering. Some of the costs you have paid regularly all these years may
suddenly decrease or fade away. Others may increase.
Will your
insurance costs rise with age?
Maybe not. You may find that your overall insurance expenses decline. Yes,
health insurance becomes more expensive the older you get – but those premiums
are merely part of the bigger insurance coverage picture. If you stop working
in retirement, you have no need for disability insurance. You might have little
need for life insurance, for that matter. You may have paid off your home and
other major debts, and rather than drawing income from work, you will be
drawing it from investments and Social Security.
You can
expect your medical expenses to increase. By how much, exactly? That will vary per
household, but perhaps you have read some of the latest estimates. This summer,
Fidelity Investments said that a 65-year-old couple retiring today will need
around $260,000 to cover future health care costs. This estimate assumes they
live 20-22 years after they retire. Long-term care coverage was not included in
that projection; Fidelity projects that a policy providing three years of care
at $8,000 a month would cost the same
couple an extra $130,000.1
How about
your income taxes? If you live on 70-80% of your end salary in retirement – which is not
unusual – then you may find yourself in a lower income tax bracket. Yes, your Social
Security income may be taxed – but, even in the worst-case scenario, no more than
85% of it will be.2
If you have invested using a Roth IRA, you
will be looking at some tax-free retirement income – provided, of course, you
have owned the IRA for at least five years and are older than 59½ when you
start making withdrawals. While a Roth account held in a workplace retirement
plan requires withdrawals beginning at age 70½, the withdrawals will still be
tax-free if you follow IRS rules.3
Will your
housing costs fall? Over the long term, they may. Some retirees own their homes free and
clear and others nearly do. Homeowner association fees and property taxes must
still be paid, so, while that mortgage balance may be gone or nearly gone,
other recurring costs will remain.
Homes inevitably need repairs, so, in some
random year, you may find your housing costs jumping. Downsizing and moving
into a smaller home can also mean a short-term rise in your housing expenses.
If you do downsize and move, you will hopefully relocate to an area where
housing costs are lower.
Will you
face education costs? You may have retired your own college debt, but if you have children
forty or fifty years younger than you are, you could risk retiring with some of
their student loan debt on your hands. That expense could linger into your
retirement – a valid reason to reject assuming it in the first place.
One “cost”
may disappear, leaving you with a little more money each month. Once retired, your
constant per-paycheck need to save for retirement vanishes. So if you are
assigning 10% or 20% of your paychecks to your retirement accounts, you may be
pleasantly surprised to find that money back in your wallet (so to speak) after
you transition into your “second act.”
This material was prepared by MarketingPro, Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates. This
information has been derived from sources believed to be accurate. Please note
- investing involves risk, and past performance is no guarantee of future
results. The publisher is not engaged in rendering legal, accounting or other
professional services. If assistance is needed, the reader is advised to engage
the services of a competent professional. This information should not be
construed as investment, tax or legal advice and may not be relied on for the
purpose of avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.
Securities
offered through First Heartland Capital, Inc. Member FINRA/SIPC
Bogetto Financial is
not affiliated with First Heartland Capital, Inc.
Bogetto &Associates does
not provide legal or tax advice. These topics are discussed in
conjunction with your CPA, Tax Advisor and Attorney.
Citations.
1 - chicagotribune.com/business/columnists/ct-marksjarvis-retiree-health-costs-0821-biz-20160819-column.html
[8/19/16]
2 - ssa.gov/planners/taxes.html
[9/22/16]
3 - investors.com/etfs-and-funds/retirement/comparing-a-roth-401k-and-roth-ira/
[1/6/16]
Financial Health...For Now & Tomorrow
Contact us Today
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
Website - www.bogettoandassociates.com
Telephone - 314-858-1602
Email - peter@bogettoandassociates.com
10805 Sunset Office Drive, Ste. 202
St Louis, MO 63127
No comments:
Post a Comment