Do you dream about retiring? If you are lucky enough to enjoy your career or profession, you might be hoping to work until age 70 to receive the maximum Social Security Administration benefits.
Even if you don’t like your job so much, you may still be considering staying on the job past the minimum age of 62 to begin collecting Social Security Administration benefits to avoid being penalized with a lower monthly payment.
But the reality is that nearly 50 percent of Americans begin collecting Social Security benefits at age 62 every year, and many do it without a retirement plan.
Although the percentage of Americans taking Social Security benefits at age 62 has been declining since a 1983 law provided incentives to delay retirement, it still remains the most popular age to begin receiving benefits.
Unfortunately, most people not only underestimate the age at which they will retire, they also underestimate how much money they will need in retirement by not considering all of the potential expenses associated with aging.
To avoid applying for Social Security benefits prematurely, start with this retirement checklist:
1. Review your Social Security Administration benefits
The Social Security Administration provides a convenient, user-friendly way to track earnings and estimate future benefits by creating an account through its secure website. You will discover the penalty for retiring at age 62 could be as much as 25 percent.
2. Review your retirement savings and investments
If you are lucky enough to have an employee sponsored defined benefit or pension plan, review your latest statements to calculate the monthly amount you will receive. Also, review all of your other personal and company investments and savings, such as IRAs, ESOPs and annuities, to calculate the total cash value and potential monthly income.
3. Review your health care coverage
Investigate what if any health benefits your employer will provide after retirement. If you retire before age 65, expect to pay monthly premiums of at least $500 or about $6,000 per year. The monthly payment will decrease when you reach age 65, when your former employer likely will require you to enroll in Medicare. Even with Medicare, most retirees will want to purchase additional insurance known as a “Medigap” policy to cover expenses not covered by Medicare or Medicare Part D for prescriptions.
4. Consider long-term care insurance
Medicare does not cover long-term care in a nursing or assisted living facility. Although most people think they will be able to age at home or in place, the reality is that 70 percent of the population will eventually need this level of care.
5. Include funeral and burial arrangements in your retirement plan
The cost of burial and funeral arrangements continues to rise every year. Services available through the National Network of Cemeteries at MemorialPlanning.com provide prepaid burial planning services to avoid paying higher prices in the future for burial expenses.