Retirement planning can be equal parts stressful and exciting.
You finally get to sleep in on Mondays, enjoy your hobbies,traveland spend more time with family.
But creating a retirement plan is tricky.
There are many moving parts to consider, from Social Security and Medicare to taxes and investments.
It can seem daunting, but the sooner you make a retirement plan, the better.
How long will your retirement be?
A study released in 2023 showed people underestimate how long they will live, which is called longevity literacy.
People who make it to retirement age can estimate living at least a couple of decades more.
Social Security has a life expectancy calendar that can give you average estimates of longevity.
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Check out these tips to avoid financial stress and worry during your golden years.
Several well-known formulas and guidelines attempt to help you figure out how much you gotta retire.
Take Inventory of Your Assets
Youll need to get a firm handle on your future cash flow in retirement.
Youll want to review information from all your retirement savings, too.
Its important to consider how your financial situation and living expenses will change in retirement.
Dont forget about other financial obligations, too, like caring for parents or supporting children.
But if you opt in early, your monthly benefits will be reduced significantly.
You arent eligible for full Social Security benefits until you reach whats known as yourfull retirement age.
Full retirement age used to be 65, but that hasnt been the case for a while.
Keeping these figures in mind can help you pick the right retirement date to fit your budget.
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4.
There are other ways toboost your monthly benefit, but unfortunately, there arent any quick fixes.
check that to report earnings you make from tips, freelancing and self-employment throughout your career.
Failing to report these earnings could reduce the amount of Social Security you get later on.
How much you receive from Social Security also depends on your marital status.
Doing so wontimpact their benefits.
Can You Survive 10 Days of Budgeting?
If you gotta wrangle your budget, it may be time to consider a savings challenge.
Plan on Working in Retirement?
Know the Social Security Earning Limits
Yes, you canwork and collect Social Security at the same time.
Lets say you started collecting Social Security at 62 and receive $1,200 a month.
A couple years later, you go back to work and earn $30,000 in a calendar year.
But and this is really important that money isnt gone forever.
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6.
Get Familiar with Your Health Care Options
Health care will likely be one of your biggest costs in retirement.
Even if youre in good health now, its important to plan ahead and understand your health care options.
Early retirees can find themselves in a tough health care situation.
(If theyre on Medicare, they cant add you to their plan).
Another option is to extend your employers insurance benefits through COBRA for 18 months.
Contrary to popular belief, this federal health insurance program isnt free and it comes with several out-of-pocket costs.
Theres a lot toknow about Medicare much more than we can cover here.
People diagnosed with end-stage renal disease or ALS also qualify.
Understand How Your Social Security Benefits Are Taxed
Your Social Security benefits are technically income.
So do youowe taxes on Social Security?
In some cases, yes.
The IRS wont tax your entire Social Security income, even if you exceed those thresholds.
Heres a table of thetax bracketsfor reference.
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Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.
