Whether you are just starting your career or exiting the workforce, it’s a good time to take control of your retirement. Fidelity Viewpoints recently released an analysis of actions to take that can help you sustain a comfortable lifestyle in your golden years. It just takes a little preparation. Here’s what aspiring retirees should know.
A financial advisor could help you create a financial plan to protect your investments and identify new opportunities to make money.
Fidelity hews to a couple of major rules of thumb to bolster retirement preparedness. For one, savers should adhere to the 10x rule — that is, socking away 10 times their annual salary by the time they are 67. In addition, Fidelity suggests that Americans defer 15% of their paychecks toward retirement funds.
But beyond those fundamentals, Fidelity suggests three key ways to take control of your retirement to contend with the challenges of longevity risk and hefty expenses you may face after you stop working.
3 Ways to Take Control of Your Retirement
1. Adjust how you pay and save money for your healthcare expenses.
According to the Fidelity Retiree Health Care Cost Estimate, the average retired couple who is 65 years old in 2022 might need $315,000 saved in retirement to cover healthcare expenses.
Using long-term care insurance can help you lower costs. Long-term care insurance helps cover the cost of care that results from life-changing circumstances such as an injury, chronic illness or disability. Considering that annual premiums are partly based on age, buying a policy earlier will likely be more affordable.
Opting to use a health savings account (HSA) can help as well. An HSA helps you invest for future medical expenses while gaining tax breaks in return. If your employer offers an HSA in conjunction with its high-deductible health plan, consider using it. An HSA will deduct money from your paycheck on a pre-tax basis. That will reduce your taxable income and may result in lower taxes.
2. Monitor your personal inflation.
While a higher percentage of inflation can signal higher prices in establishments across several industries, it impacts each consumer differently. A lot of that is due to two major points: People live in different places across the country and generally have different spending habits.
Analyzing your personal expenses and how they rival inflation can help you cut costs. And adding investments to your savings strategy with a diversified portfolio that reflects your savings habits and risk tolerance can be beneficial.
3. Put your money into income-generating products.
Fidelity suggests annuities as an option for your portfolio. You can get an annuity through an insurance company where you’ll pay a premium in exchange for guaranteed payments regularly in retirement. You can also go after dividend-paying stocks, which can offer consistent income.
Bottom Line
Retirement offers a different journey for everyone. But Fidelity notes there are clear ways to take control of your golden years. Preparing for healthcare costs through HSAs and long-term care insurance can help, as can maintaining a diversified portfolio. Constantly monitoring your personal expenses and adjusting your costs can offer long-term savings. And looking for income-generating products is always a plus. Annuities or dividend-paying stocks to your portfolio for example can help you sustain long-term gains in retirement.
Retirement Tips
- A financial advisor could help you create a financial plan for your retirement needs and goals. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- SmartAsset’s free 401(k) calculator can help you estimate how much your retirement savings can grow over time.
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