Educators who are in their 50s and early 60s know that retirement is drawing near. The average age of a CalPERS retiree is 60 and 61.3 for a CalSTRS retiree. With retirement looming, it is important to assess your financial preparedness.
Here are tips for retirement planning in your 50s and 60s:
Calculate How Much You Need to Live After You Retire – It is important to know how much money you will need to live comfortably after you retire. Start by creating a retirement budget. Typically, retirees need 90 to 100 percent of their pre-retirement income to retire and maintain the same standard of living. Anticipate expenses like inflation and higher health care costs as you age.
Know How Much Income Your Pension Payout Will Provide – At this stage it is important to know how much income your pension will provide throughout your retirement years. Now is the time to know your pension payout options. Both CalPERS and CalSTRS provide several options. Some payout options will reduce your pension income and increase the gap between pre-retirement and post-retirement income. Once you know how much income your pension will provide, determine if your 403b plan or 457 plan will supplement the gap of lost income. Once you know how much you have, you will know if you have reached your goal or need to save more.
Rebalance Your Portfolio – As you near retirement, you may want to move a larger percentage of your portfolio to more conservative investment options.
Gather Social Security Benefits Information – If you worked any other jobs in the past where you have Social Security earnings or you have a spouse with Social Security earnings, know how it will affect your retirement income.
Apply for Social Security – If you have paid Social Security tax, you are eligible for Social Security. You must submit your application three months before you expect payments to begin.
Continue to Make Contributions – If you have not reached your goal, you may need to make extra payments before you retire.
Consider Health Care Coverage – It is important to determine if you employer will continue to provide healthcare coverage for you and your spouse once you retire. If not, you will want to look into other health care coverage options. You should also investigate your Medicare options. If you have not already, you will also want to consider purchasing long-term care insurance to avoid paying high out of pocket expenses down the road.