Preparing to Retire During COVID
Can I retire now? That depends. Even in the best of times, taking steps to prepare for retirement isn’t easy. Add in a global pandemic and planning for retirement can get even more challenging.
More than 18 million Americans are expected to retire in the next five years. According to a new report from the National Institute on Retirement Security, more than two-thirds agree that the nation is in the midst of a retirement crisis, and 56% are concerned they won’t be able to achieve a financially secure retirement.
Should I retire now? With the ongoing COVID-19 crisis still looming — impacting our well-being, finances and the economy — how can you prepare for retirement with financial peace of mind?
Supporting a financially healthy future
As your time in the workforce comes to an end, it’s critical to nail down reliable strategies for retirement funding and get your financials in check — so you’re not just getting by, but enjoying the years ahead.
- Don’t necessarily rely on Social Security. Currently, the full benefit age for Social Security is 66 for people born between 1943 and 1954. It gradually rises to age 67 for those born in 1960 or later. To maximize your Social Security income, you may want to wait to claim your benefits until you reach full retirement age or the top threshold of 70. If you start collecting early, your individual retirement benefit is reduced by 5/9 of one percent (or 0.0056) for each month that you receive benefits prior to reaching your full retirement age.
- Max out your 401(k)s and IRAs. In 2021, you can contribute up to $6,000 to a traditional or a Roth IRA, plus an extra $1,000 if you’re 50 and over. Workers can also defer up to $19,500 into a 401(k), and an additional $6,500 if you’re age 50 and over. You can begin withdrawing without penalty once you reach age 59½. This can be great way to supplement your retirement funding — but it doesn’t come without some disadvantages. Because this money is considered income, early withdrawals will result in having to pay taxes.
- Get your savings on track. As the economic recovery continues, make sure you’re not neglecting your emergency fund. Over the past year, one-third of people withdrew money from savings to cover current costs of living, while 20% reduced or depleted their emergency savings. Less than 50% had emergency savings to begin with. Before you leave the workforce, ensure you have enough put aside for life’s unexpected events, which many experts agree should be three to six months of living expenses.
- Plan on part-time work. Keeping one foot in the workforce is great way to stay busy and socially connected, and add a boost to your spending and saving. Did you know that 55% of Americans plan to work during retirement, with 41% opting for part-time positions? Not only will you maintain a steady stream of income, but working can help offset the need to dip into your retirement investments so that money can continue to build. Keep in mind, with both a 401(k) and a traditional IRA, you’re required to take minimum distributions starting at age 72.
- Consider a reverse mortgage loan. Even prior to the COVID-19 pandemic, most people within 10 years of retirement reported that they planned to stay in their own home throughout their retirement years. A reverse mortgage can help make that possible — plus, offer you a retirement stream of funds. If you’re a homeowner age 62 or older, a reverse mortgage loan can be a smart financial tool for retirees that allows you to leverage the equity you have built up in your home as a lump sum, monthly payments or a line of credit, all while you live in your home and retain ownership.* As with any mortgage, you’re still responsible for loan obligations, such as paying property taxes and insurance, as well as keeping up with home maintenance and repairs.
Your safety net during the pandemic — and beyond
An important reminder from the pandemic: Change can happen in the blink of an eye. If you’re still questioning, can I retire now or should I retire now, a reverse mortgage can give you peace of mind that funds are available if and when you need them. Reverse Mortgage Funding (RMF) can answer your questions and help decide if a reverse mortgage is the best option for you and your individual needs, so call (888) 277-1567 today.
This content is sponsored by RMF, one of the nation’s leading reverse mortgage lenders. We are dedicated to helping older Americans retire more freely, in the comfort of their own homes. As a result of our commitment to providing an extraordinary and positive customer experience, we have earned a 98% customer satisfaction rating; a 4.7-star / Excellent score on Trustpilot; 4.8 out of 5 stars on LendingTree; and an A+ rating with the Better Business Bureau. Call 888-277-1567 to speak with a licensed reverse mortgage specialist to learn about our retirement financing products and solutions.
This information is intended for those who are interested in financial education. This information is provided for convenience only, and RMF make no warranties concerning the accuracy or completeness of any of the information. Information is subject to change without notice, and RMF is under no obligation to provide updated information. Materials or statements made by a third party and located or posted on the Site are those of the third party and do not necessarily reflect the official policy or position of RMF. This is not financial, tax, compliance or legal advice and should not be taken or relied upon as such. Each individual should consult with his/her financial, tax, or legal professional. All mortgage origination services are provided by Reverse Mortgage Funding LLC, a state licensed mortgage lender, which is licensed or otherwise exempt from state licensing in the states in which it originates mortgage loans.
* Borrowers who elect a fixed rate loan will receive a single disbursement lump sum payment. Other payment options are available only for adjustable rate mortgages.
SEE WHAT FUNDS YOU MAY HAVE AVAILABLE
If you have equity in your home and believe you meet the eligibility requirements, a HECM may be the option that could help you retire smart.