6 Things You May Not Know About Retirement

Updated: Oct 29, 2021


It's never too early to start planning for retirement. Retirement is a topic that hits the news daily, and not all of the headlines are positive. Even though people are living longer, many are not saving enough to meet their long-term requirements. Having a strategy for how you want to spend your senior years, whether you want to retire as soon as possible or intend to work until you can no longer, turns aspirations into reality. Continue reading to learn about some fascinating and lesser-known retirement statistics that will assist you in your planning.


1. Plan For More Than 20 Years of Retirement

Medical advancements have resulted in greater life spans than ever before. When a married pair reaches the age of 65, the longer-living spouse has an average lifetime of more than 20 years. At least one retirement plan member is likely to travel, eat out, and pay for healthcare for the next 25 years. When pensions were popular, a 25-year retirement plan was unthinkable, which is one of the reasons they fell out of favor. Individuals are, unfortunately, left to their own devices as a result of this. To mitigate the risks of longevity and inflation, consider maintaining a well-balanced investment portfolio of stocks and bonds early in retirement to provide growth. Annuity investments may be a solution to the risks that longevity adds to your financial plan.


2. Medicare Won't Cover Assisted Living

According to government statistics, over 70% of people who reach the age of 65 will require long-term care at some point. According to Genworth Financial Inc., the median cost of an assisted living facility in 2020 was $4,300 per month. In 2020, a private room in a care home cost more than twice as much. Many seniors are unaware that Medicare does not cover the majority of long-term care expenses. It only covers 100 days of skilled nursing facility care if a three-day hospital stay preceded it. If you don't have a large savings account, you should start thinking about long-term care insurance in your late 50s or early 60s.


3. Retirees Often Forget About Travel Expenses

When they retire, many individuals look forward to traveling. However, according to a Merrill Lynch poll, approximately two-thirds of Americans aged 50 and over say they haven't budgeted for their retirement vacations. When we consider how much time we spend arranging where we'll go on vacation and what we'll do there, this sounds short-sighted.


4. Your Social Security Benefits Can Be Taxed

You'll probably feel more secure after you qualify for benefits since you'll be able to count on a monthly Social Security check for the rest of your life. While this is true, you may be shocked to learn how much of your benefit you may retain. Your Social Security payment is subject to taxation- up to 85% of it, in fact. If your provisional income is over $34,000 for an individual or $44,000 for a couple, up to 85% of your benefit may be taxed. Half of your benefits may be taxed if you earn less than $25,000 in provisional income as an individual or $32,000 as a pair. Furthermore, 13 states, including Colorado, Connecticut, Kansas, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Rhode Island, Utah, Vermont, and West Virginia, charge taxes on part or all Social Security payments.


5. Social Security is Often Not Enough

When it comes to retirement, many financial experts advise replacing 80 percent of your regular income. The majority of the time, Social Security payments alone will not be adequate to meet that goal. The average monthly Social Security income in 2020 was only $1,503, equating to $18,036 per year. For this reason, it's critical to begin saving when you're young. Great ways to save for this period of your life include taking advantage of an individual retirement account (IRA) or a corporate 401(k).


6. Your 401 (k) Savings Can Be Taxed

Calculating your retirement account's tax burden might seem difficult. Contributions to eligible retirement accounts, such as 401(k)s, 457 plans, 403(b)s, and IRAs, are tax-deferred by the IRS. Without being taxed, that money is invested and increases. The IRS, on the other hand, will ultimately get its share. These accounts' distributions are taxed like regular income. The average 401(k) account balance for a 65-year-old is $216,000. Tax rates vary by state and over time, but effective income tax rates for retirees are typically in the range of 10% to 15%. Whenever you take your savings into account don't forget to factor in the amount you are losing to taxes.


Schedule A Consultation with an Experienced Financial Advisor

Whether you've been planning for retirement for years or are just starting the process, we are here to help. Here at Fourth Avenue Financial, our first priority is your overall financial success. We want to help you develop, implement, and monitor a strategy designed to address your individual situation. If you are ready to start planning for your financial future, we are here to help. Contact us today at (304) 746 7977 to schedule a meeting with one of our experienced financial advisors or schedule online: https://calendly.com/fourthavenuefinancial/introductory-zoom.


Securities are offered through J.W. Cole Financial, Inc. (JWC) Member FINRA / SIPC. Advisory Services are offered through J.W. Cole Advisors, Inc. (JWCA). Fourth Avenue Financial and JWC/ JWCA are unaffiliated entities.

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