Answer: The key to retirement is “cash flow.” If at all possible, you want enough monthly “cash flow” to exceed your monthly “cash outlays.” So I would suggest you first write down all your sources of retirement income. This is passive income that you can count on for the rest of your life…not wages or earnings. Then take an hour or two and estimate what your expenses are going to be during retirement. You can probably use the last three months spending to help give you some guidelines.
If you are comfortable that your monthly “cash flow” is greater that your monthly “cash outlays,” then you can probably think seriously about retirement.
Be sure to factor in the cost of health care into your calculations. Medicare is available for most people at age 65. You will be required to pay for the Part B and Part D coverage, which will be withheld from your social security check. The total of Parts B and D will probably be in the $125-150 per month range. Most people also like to purchase a Medicare Supplement insurance policy, which will probably cost in the $125-150 per month range.
Remember; when you elect to take social security at age 62, you will receive 30% less in benefits, than if you wait for “full retirement age,” which is age sixty-six. And, this 30% discount lasts for the remainder of your life.
Two more big items are inflation and death. If your retirement “cash flow” does not increase with inflation and your “cash outlays” do, this can result in some lean late-in-life years, if you have no “extra” today. And, be sure to consider how much of your “cash flow” will disappear upon the death of you or your wife.
Good luck with your retirement planning. You might consider an in-between retirement, where you semi-retire and continue “working” doing something you really enjoy. Work doesn’t have to be a four-letter word.
To locate experts in your state who can help you with these elder care financial matters, go to: www.ElderCareMatters.com – A FREE online source to find elder care experts plus information & answers about a wide range of elder care matters.
Philip C. Benedict, CFP
Benedict Financial Advisors, Inc.
Atlanta, Georgia 30328
Member of the ElderCare Matters Alliance, Georgia chapter
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