Baby boomers have been changing the face of the U.S. population for 70 years, and no more so than in when and how they retire. As many as three million older workers retired early last year, largely due to the pandemic, and another wave is expected to retire in 2022, as those born in the early to mid-fifties approach the typical retirement age.
Of course, many aging but healthy boomers today opt to work longer than previous generations. But if you are among the millions planning to retire next year, here are five tips from money experts about the things you should be doing now.
- Take Advantage of Catch-Up Contributions – Max out retirement plans such as a 401(k) and IRA -including catch-up contributions – the extra contributions you’re allowed to make after age 50. For example, in 2021, the 401(k) contribution limit is $19,500, but with catch-up contributions, it comes up to $26,000.
- Check Your Social Security Benefits – You can get a very accurate estimate of what your Social Security benefits will be by signing into your online account. Do that now so you can see how much your retirement checks would be at different claiming ages. That can help you decide if you want to claim benefits upon retiring or wait a little to raise the amount of your monthly checks.
- Decide on a Safe Withdrawal Rate – If you aren’t going to be able to live on Social Security alone when you retire, you’ll have to start making withdrawals from your retirement accounts. Check now with your financial advisor and/or plan now how much to safely take out of your accounts each year without the risk of running out of money.
- Estimate Your Future Income – Once you know your Social Security income and the amount you can withdraw from retirement accounts, you can accurately estimate the amount you’ll have available when you retire. If that isn’t enough, start looking into alternatives such as postponing retirement or working part-time.
- Check Insurance Options – If insurance will no longer be covered by your employer once you retire, and you will be 65 or older, look into the cost of Medicare or Medicare Advantage. If under 65, explore COBRA or an Affordable Care Act plan.
