PM 1817 | June 2014

Extension and Outreach

RETIREMENT:

SECUREYOUR

FUTURE

SECURING YOUR FINANCIAL FUTURE SERIES

Picture Your Future When you picture your future, you may see hundreds of possibilities. If you start planning today, you can customize your picture and begin working toward securing it. How many more years do you plan to work? For people looking down the road 20, 30, or more years, your later life plan may be just a sketch on the back of a napkin! For those with five or less years to retirement the picture details need to become more focused.

What do you want your later years to look like? • Where do you plan to live? Your current home? Current city?

Current state?• Will you care for grandchildren or elderly parents? • Will you continue your current job as long as possible or work

part-time?• Do you have a second career in mind? • Do you plan to travel? By car or air? Stay with friends or at a four-

star hotel? • Do you plan to volunteer your time for a special cause?• Will you take classes or enjoy sport activities? • What else is in your future?

The preceding questions and others will help you to begin pulling the pieces of your plan together. If you plan to fish, you can drive a mile to drop your line in the water and sit in a well-used lawn chair or you can travel several hours from home to fish from a boat or fly to Canada, Alaska, or the Gulf to charter a boat with a guide. Big difference in the cost! The same can be said for all types of activities—golf, biking, sightseeing, and others. How will leisure and your style match your available funds? Does the special person in your life have a similar future picture?

Write your later life goals below and estimate the possible cost. If you are within five years of retirement, include the cost of your goal in the PM 1818B, Estimating Your Retirement Expenses— store.extension.iastate.edu/Product/PM1818B. Review your plan often and adjust as life changes.

Goal Estimated goal cost

When do you plan to retire? Longevity is an important aspect of planning for our future. What is your life expectancy? For many of us, it is age 90, 95, 100, or longer! When do you plan to retire? If you retire at age 65 and live 30 years, how will you fund those years? Three of several Web longevity calculators follow.

• Social Security—www.ssa.gov/OACT/population/longevity.html

• Living to 100—www.livingto100.com• University of Pennsylvania—gosset.wharton.

upenn.edu/~foster/mortality

One example of how retirement timing decisions impact Social Security, a 401(k), or other retirement accounts is from the Social Security Administration Publication No. 05-10147. A person who would receive a $1,000 benefit at full retirement age of 66 would receive the following monthly amounts depending on when he or she begins to receive benefits:

Age 62 Age 65 Age 66 Age 67 Age 70

$750 $933 $1,000 $1,080 $1,320

What will be included in your retirement income? • Social Security? • A pension or annuity from your employer? • Pre-tax retirement funds: 401(k), 403(b), Roth

IRA, Individual Retirement Account (IRA)?• After tax investments or savings?

To learn more about accumulating, investing, and taking funds, visit additional publications in this series:• Where Will Money for Your Nest Egg Come

From? PM 1820—store.extension.iastate.edu/Product/PM1820

• Growing Your Nest Egg: Risk and Return, PM 1821—store.extension.iastate.edu/Product/PM1821

• Retirement Investment Options, PM 1822—store.extension.iastate.edu/Product/PM1822

Where do you plan to live?This may be a larger question than it seems. Does your current home have a main floor bedroom and bath with doorways large enough for a walker? How might your housing needs change over time? What services are available in your current community? To learn more read PM 1824, Update Your Home for a Lifetime of Living—store.extension.iastate.edu/Product/PM1824.

Thinking of moving out of state for all or part of the year? Have you visited this location at various times of the year?

Is medical care available locally, if needed? What other housing options are available in your community or a community to which you plan to move?

Are you still paying a mortgage? If so, what will it mean for your retirement life style?

Be Prepared for the Future Part of planning is to consider what the future might bring—both the positives and challenges.

How’s your health?Planning for later life means thinking about all aspects of life. Ask your doctor about the health outlook for your future. There are many things in life that cannot be controlled. Engaging in healthy life styles is one thing you can control. Making wise nutrition choices and being physically active on a regular basis will affect your ability to respond to life’s challenges. ISU Extension and Outreach has several good resources: www.extension.iastate.edu/humansciences/healthy-living-and-eating-families and store.extension.iastate.edu/ProductList.aspx?CategoryID=45. Enjoying the people and activities important to you along with a positive attitude will set the stage for a healthy later life.

Which activities did you enjoy as a child or young adult—riding a bike, bowling, dancing, golfing, or another activity? How can these fit into a healthy life style today? If needed, are there ways to adapt the activity so you can continue to enjoy it in later life? Maybe you can trade your two-wheeled bike for a three-wheeler!

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People Age DifferentlySome people move through their 70s, 80s, or 90s with only minor changes in daily activities. For others some activities of daily life become more difficult over time. How many stairs do you climb currently at home? Sometimes adaptations may be needed to remain independent.

For those who drive, it is hard to realize how dependent they are on their vehicles. If you could no longer drive, how could you access transportation to visit the doctor, buy groceries, and participate in the activities you enjoy? How do people in your community who do not drive get around—public transportation, taxi, or rides arranged with friends or family?

Activities like shopping in the winter, changing a ceiling light bulb, cooking on days you don’t feel well, cleaning the house, washing and mending clothing, and other tasks you currently do with ease may become more difficult in later life. How available are adult children to help? Are you willing to move to live near adult children or others important to you? Do you have long term care insurance?

Consider your goals, wishes, wants, and desires as the beginning point in planning your later life. Is continuing to live in your current home, even if you may become isolated, more important than living where people are available for interaction?

Is your family giving care to an adult? Visit the caregiving page at www.extension.iastate.edu/humansciences/caregiving-adult-caregiving for resources.

What if illness strikes? As you complete the Retirement Expenses Worksheet found in PM 1818B —store.extension.iastate.edu/Product/PM1818B, consider including Medicare: Parts A, B, D, and a good supplemental insurance policy, along with money for co-pays, deductibles, and over the counter health related items.

Premiums for supplemental insurance can go up as people age. Visit the Senior Health Insurance Information Program (SHIIP) site at www.shiip.state.ia.us for the “Iowa Medicare Supplement & Premium Comparison Guide,” which explains how Medicare coverage works and lists premiums for all companies who sell Medicare Supplements for people over 65 in Iowa. Different premiums for policies A—N are listed for ages 65, 70, 75, and 80.

What changes when a spouse dies?Would your income be reduced, if you lost your spouse? Couples who receive two Social Security checks and possibly a single life pension or annuity check would experience a reduction in their income stream when one person passes. Which expenses will go down? Current widows report few reductions in the cost of living. Food may go down some unless you eat out more. The costs of utilities, property tax, rent, and home upkeep for the most part do not go down.

What changes with a later life divorce?Divorce leads to a division of family assets that requires a redrawing of your later life picture. Start by adding up what you own and owe to determine your new net worth. Two publications explore possible changes: Divorce Matters, Separating Your Finances, PM 1719, store.extension.iastate.edu/Product/PM1719 and Managing Income and Expenses, PM 1720, store.extension.iastate.edu/Product/PM1720.

If you were married for at least 10 years, you can receive half of your former spouse’s Social Security if that is higher than what you can receive on your own record. Check with Social Security at www.ssa.gov to learn more.

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Considering Remarriage in Later Life?Do you or your new spouse have children or assets to protect? If so, you may wish to consider a prenuptial agreement to protect them in the event of your death or a divorce. A prenuptial must be signed before the marriage occurs. Contact an attorney to learn more.

To learn how remarriage can affect your Social Security benefits, refer to What Every Woman Should Know, 05-10127. Contact your local Social Security office, call the national number 1-800-772-1231, or visit their website at www.ssa.gov.

If you receive company retirement benefits or an annuity from a deceased spouse’s employment, find out how remarriage will affect that income. Sometimes benefits end when you remarry.

Written by Ruth Freeman, family finance specialist. Reviewed by a team of ISU Extension and Outreach family finance specialists. Designed by Hobbs Designs, LLC.

… and justice for allThe U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, age, disability, and where applicable, sex, marital status, familial status, parental status, religion, sexual orientation, genetic information, political beliefs, reprisal, or because all or part of an individual’s income is derived from any public assistance program. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA’s TARGET Center at 202-720-2600 (voice and TDD). To file a complaint of discrimination, write to USDA, Director, Office of Civil Rights, 1400 Independence Avenue SW, Washington, DC 20250-9410, or call 800-795-3272 (voice) or 202-720-6382 (TDD). USDA is an equal opportunity provider and employer.

Issued in furtherance of Cooperative Extension work, Acts of May 8 and June 30, 1914, in cooperation with the U.S. Department of Agriculture. Cathann A. Kress, director, Cooperative Extension Service, Iowa State University of Science and Technology, Ames, Iowa.

Extension and Outreach

This is one in a series of publications written to challenge your thinking and start your planning for the retirement you want. Find other Iowa State University Extension and Outreach publications that can help you secure your future by searching for “retire” at our Online Store.

http://store.extension.iastate.edu

Where can I find additional resources? Mid Life & Beyond: The Whole Picture (a program offered by ISU Extension and Outreach) is designed to help you consider your future and whether your community is elder friendly. Visit www.extension.iastate.edu/midlifeandbeyond/ to learn more.

University Extension specialists from land grant universities around the country provide additional retirement planning resources at www.extension.org.

NOTE: We are not attorneys. Information provided is educational in nature and designed to help you think about the issues of aging. It is not legal advice.