A senior costs her three homes to pay for 15yrs of staying in a care home facility.She has no retirement savings, long term care or other means of generating income. Her diabetes caused her death after 15 yrs in a care home with not enough exercise and motivation to eat healthy food even when the care home prepares a gourmet meal for her. So if you are planning to retire with sufficient funds, plan early.
Here are a few of her rules of thumb to help you catch up after age 50:
Make savings non-negotiable
People who are not really taking their savings seriously, unfortunately, are going to move themselves into this area of poverty. For someone who has not been saving, take a real hard look at where their money is going and make savings automatic, non-negotiable.
If you make savings a high priority, there’s a lot of opportunity to make a difference. Let me give you a financial example: If a 50-year-old was to take advantage of the 401(k) and save $23,000 for the next 15 years until they’re 65, at a 6% rate of return that money can grow to [about] $570,000. Also take a look at credit card debt because the interest that you’re paying could easily be going to savings.
The 25 Times Rule
You will need 25 times the amount you’ll need to withdraw from your savings to supplement retirement or any other reliable income. So, for instance, if you need $40,000 per year of supplemental income, you will need a million dollars saved at the time of retirement.
The Minus 10 Rule
If you start saving in your 20s, you can save up to 10% and you should have a relatively comfortable retirement. However if you wait until your 30s, you’re going to have to save at least 20%. And then your 40s [save] 30%, and 50s of course 40%. That sounds like a lot of money, but in this country two-thirds of Americans use Social Security as their primary source of income. For a third of Americans, it’s their only source of income. And, unfortunately, the average amount of Social Security is approximately $15,000 [a year].
Are there things that you can cut out? For instance, even life insurance. For a lot of people it’s a waste of money — they don’t have dependents or a small business. Really look at where you can cut money — is it cable television? Do you need that car?
Saving for your health
Keep in mind we’re living longer. In our early retirement days we are going to be active and that’s where our money is going to go. But in our later years, a lot of our money is going to go to health care. A lot of people don’t really think about health care costs and embedding that into their savings.
If you have access to an Index Universal Life policy consider maximizing the funding in it and let it grow over the years so that when you do retire, you have that nest egg.
A lot of people assume that Medicare is paid for and all their medical expenses are going to be paid for, but actually the premium is deducted from your Social Security benefit so Medicare only covers about 60% of your health care costs, so it’s really important to embed health care in your whole retirement savings plan.
Contact Connie Dello Buono CA Life Lic 0G60621 for a investment-retirement-savings plan that will provide a lifetime income, a similar to long term care insurance, with estate plan, life protection and tax-free and risk-free. Best of all it has been growing up to 8% during the last 20yrs.