It used to be that when a person was about to retire, the most he had to think about was whether he would be spending his carefree retirement days fishing by the lake or pursuing a lifelong hobby. Times have changed and so have retirement issues. Nowadays, those heading towards retirement have many more complex issues to deal with. Retirement planning now includes such subjects as senior health, income and finances. If there's any time or money left over after dealing with these issues, the retiree may be able to cast off a line or two.
Senior health is a major concern for many people. Senior health as discussed here does not necessarily deal with the availability and affordability of health-related services; in this sense it actually refers to the general state of the retiree's physical and mental well-being. When one begins to consider the subject of retirement planning, senior health is sometimes overlooked. It's difficult to make plans for retirement when senior health is an issue.
It's been shown that during retirement, those who are in good health are happier. Stable finances and a regular and reliable source of income help to ensure that the retirement years are enjoyed and remain fruitful. Whether or not a person feels they are aging well seems to come down to a matter of personal opinion and observation. There are many individuals in retirement who even when suffering from chronic ailments and illnesses, feel strongly that the state of their senior health is positive. Those with negative attitudes, even if their health is better overall, tend to suffer from more senior health-related problems.
When it's time to discuss retirement planning, senior health is a big factor in how those years will be lived. If you're beginning to think about retirement, take steps now to protect your senior health. If you smoke, stop now. If you drink more than one drink per day, cut back. If you love to eat out or love to eat fat-laden foods, change your diet so that you consume foods that offer more nutrition. Your waistline and your wallet will be happier. If your lifestyle is sedentary, then start moving. Find something you like to do and start doing it. Every little bit of movement benefits the state of senior health. Physical activity has also been shown to lower the risks of heart disease and it can also improve memory, which is something that always seems to weaken during retirement. If you tend to keep to yourself, start participating more in group activities. Remaining sociable is an important component to positive senior health. Plus, if you're spending your retirement years alone, why not try to find a companion? You need not look for a spouse, just someone with whom you can enjoy those long days of retirement.
Also, get on a first-name basis with your doctor. Many people do not factor regular doctor visits into their retirement planning program. These are the people who only go to the doctor when forced to go, because of an emergency or because of a pain that refuses to go away. Preventative medical care is just as important during retirement as it was during non-retirement years. This includes getting necessary vaccinations and also visiting eye, ear and other medical specialists. Cars have regular maintenance schedules and so do people. You are the only one who can do what is necessary to ensure a positive state of senior health.
It has also been shown that those approaching or actively involved in retirement have a better state of senior health if they also have sufficient finances to carry them through their golden years. Having a regular source of income also helps during retirement. Many of those who are dealing with retirement planning will make continuing employment a part of that plan. For some, the decision to continue working after retirement is a choice and for others it is a necessity.
To live in a manner consistent with their pre-retirement years, many seniors will need a minimum of seventy percent of their pre-retirement income to sustain that way of life. The ability to sustain a particular lifestyle is an important component for maintaining senior health. Retirement is supposed to be comfortable but for many it is not. Reduced income and dwindling finances create the necessity for seniors to change from the lifestyle they have become accustomed to. Add to a reduction in income the fact that the cost of everything from gasoline to groceries continues to increase and a senior's attempt to stick to their retirement plan becomes more and more difficult.
You may find that sometime during retirement, whether by choice or by necessity, you need or want to go back to work. It's important to carefully plan out this decision. First, understand why the additional income is being sought. If more income is needed simply to keep up with the bills, then you must have a job. If income is more of a benefit of getting out of the house and doing something with all the free time that comes along with retirement, then you have time to decide where and when you want to work.
Working past retirement has become a trend. More than seventy percent of those involved in retirement planning will continue to work after reaching the age of 65. Current statistics show that in fact, seventy-two percent of seniors who are at or approaching retirement will continue to be employed or will return to work after the first few years of retirement. This is quite different from years past when many retirees took advantage of early retirement.
If you're thinking about working after retirement, understand that there are barriers to overcome. Age discrimination, although illegal, happens. Many people have negative ideas about older people who work. Many do not understand a person's need for additional income or the need to make a positive contribution to society. Instead, terms and phrases such as stubborn, technologically inept, overqualified, unable to break old habits to conform to the current work environment are just some of the things that other workers, especially younger, more aggressive ones, feel about older workers.
If you've already reached retirement and you wish to continue working, either because of the need for additional income or because you need to do something with all your available time, stay marketable. If you're able to continue working at your current place of employment, talk with someone who can help you determine what you need to do to remain an important and contributing part of the team. Find out whether or not there is anything you should be doing faster or better. Whether you're keeping a current job or whether you are seeking other employment, it won't hurt to learn new skills, especially those related to computer technology.
One nice thing about retirement is that you likely have more time for yourself than you did previously. You'll likely have fewer work, family and social commitments during retirement. More time on your hands opens up a world of possibilities for ways of making yourself more marketable and for bringing in extra income. Attend college or some other type of advanced learning environment. Take any of the many skill, personality and aptitude tests and quizzes to get a better understanding of the type of work that you are suited for and that you might enjoy. Look for volunteer opportunities. You won't generate any income when you volunteer your time, but doing so likely will make you feel good about yourself. A good positive attitude contributes to positive senior health.
One other issue to take into careful consideration when dealing with retirement planning is your finances. You need to get a realistic view of the finances you will have available to see you through your retirement years. Many seniors already living out their retirement years, especially those retirees who did not diversify, have seen their finances take a hit due to the recent downward trend of the stock market. Insufficient finances can make for a difficult retirement. Remember, as mentioned above, a retiree's overall well-being is heavily dependent on the state of their health, their income and their finances.
An important part of retirement planning is discussing your finances with a professional financial advisor. Take time to find a professional that you can trust. Ask around and get references. Take time also to educate yourself about the different alternatives available for growing or at least maintaining your finances. Interest rates, estate laws, probate laws and tax laws are constantly changing, and staying abreast of and knowledgeable about the latest changes can be overwhelming. It's advisable to get help and it's advisable to arm yourself with information. After all, they are your finances and your retirement years depend on their well-being.
Currently, a bank Certificate of Deposit (CD) is a good, low risk vehicle for growing your finances, provided you do not lock up your money for the long term. Recent interest rate changes have caused the interest rates on CDs to increase. Because interest rates are expected to continue to increase, you will be able to continue to increase the value of the CD simply by taking out short-term CDs and reinvesting again short term each time the CD matures. Each time you renew the short-term CD, the interest rate likely will be higher, so that is why locking your money up in a CD for a maximum six month period is wise, especially if you're in your retirement years.
For example, and this actually happened recently, if the interest rate increases from 2 percent to 2.4 percent over a two month period, then waiting two months longer to invest would have caused the value of a CD to increase by a whopping 25 percent! If the Federal Funds rate continues to climb, as some predict it will, by the end of 2005, interest rates on CDs may get to be as high as four, five or even six percent! Make sure your finances are available so that you can take advantage of these higher and less risky rates.
There are other investment vehicles that can help you with the finance part of your retirement plan. Some carry a greater risk that others. Some simply do not make sound financial sense right now. But again, that is where the knowledge and expertise of a reputable financial planner can really help seniors out. Stay abreast of your finances and try to always make decisions that will keep them growing.
One thing to be aware of, however, is how taxation might affect your finances during your retirement. If you're like many people, you've contributed regularly to your IRA in hopes of having a source of income into which you can tap as needed. You probably understand the basic rule of an IRA which is that that the money in an IRA is taxed as it is withdrawn. But did you also know that that the full value of your IRA at the time of your death could be subject to the estate tax? Many seniors do not realize this. Having a beneficiary designated in your IRA does not exclude the IRA from being added to your overall estate and taxed accordingly. So, an IRA worth $1,000,000 could get a double tax hit; up to 35 percent tax on the withdrawal itself, and then possibly another 45 percent tax if the full amount of the IRA gets included as part of your estate. That means that Uncle Sam could take 80 percent of your money to cover various taxes. So much for making plans for a financially secure retirement!
There's not enough room on this page to adequately explain the pros and cons of the various types of investment vehicles. However, there is room to repeat the following: Careful retirement planning is critical and can mean the difference between a comfortable retirement and one that is filled with senior health, income and other financial problems. Don't put retirement planning off until you retire—by then, it likely will be too late.