Money & Career
Is Right for You? We are living in uncertain times, especially in Southwest Louisiana. The COVID-19 pandemic and two devastating hurricanes in 2020 forever changed our lives. Many people lost their jobs or had their hours cut. When you are of a certain age, you start to weigh the pros and cons of either seeking re-employment and continuing to work or opting for early retirement.
Total the expenses to determine the monthly amount you will need to maintain the retirement you imagine for yourself. Remember, your budget will change as your life changes down the road. You might downsize and have fewer expenses on a smaller home or condo. At age 65, you’ll be eligible for Medicare, decreasing your health insurance bills —and so on. But a preliminary budget is a good starting point to see where you stand financially.
Many factors ultimately should determine if early retirement is right for you at this point in your life.
Consider Social Security. When do you plan on taking it? You can start at 62, but your compensation will be reduced if you take it early. Many seniors have no choice, but if you can hang on, it is much better to wait as long as possible so you can get the full amount.
Estimate your retirement expenses. How much money will you spend each month once you retire? Consider necessities, such as food, clothing, utilities, transportation, insurance, home maintenance and healthcare. If you still have a mortgage, credit card debt, outstanding loans, and so on, they must be factored into your budget. Add in expected discretionary expenses. Include travel, hobbies and entertainment. Assume these expenses will likely go up since you will have more leisure time on your hands.
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by Stefanie Powers
Thrive Magazine for Better Living • July 2021
How about part-time work after retirement? Many retirees do just that, either from necessity or boredom. If not, then you will need to save much more than if you plan to bring in some extra income. If you are still working, strive to max out your retirement accounts. A traditional IRA allows you to contribute to your retirement, as the earnings grow tax-free, and you get a tax deduction in the tax year you make a contribution. However, when the money is withdrawn in retirement, it’s taxed at your income tax rate in the year of the withdrawal.
