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Thinking About Retiring Early? Make Sure You Have the Essentials Covered

Do you dream of wrapping up your career early so you can pursue other interests? The idea of early retirement appeals to many of us, but it takes more than dreaming. It also requires careful planning, diligent saving through your working years and effective investment of your retirement assets. Pulling the retirement trigger early is a big step, and your long-term financial security will likely depend on doing things right from the start. Here are six steps you can take to get a sense of where you stand on the path to early retirement.

1. Map out a vision of your retirement

If you’re leaving the workforce, be sure to have a clear idea of what you plan to do with your newfound freedom. Your plans will likely dictate the amount of money you will need each year to pay for your lifestyle. Knowing the price of your dreams is key to determining whether you’ve saved enough money to fund a long retirement. Mapping out where you will live, what activities you plan to pursue and potential travel itineraries will tell a lot about your financial readiness.

2. Determine if work will come into play

Many retirees pursue other lines of work that will generate income. Is consulting, changing industries or becoming a small business owner part of your plan? Be realistic about what your potential salary might be and if your new pursuit will come with employee benefits. If you need liquid assets to set up your business or volunteer project, be sure to add those costs to your budget.

3. Take stock of your available assets

Assess the money you’ve set aside for retirement to determine whether it is enough to meet your goals. Carefully consider whether the amount you assume you can withdraw each year from savings is sustainable. The key test is to make sure that the amounts you withdraw in the early years of retirement don’t put you at risk of outliving your assets. Look into working with a financial professional who can help you craft a plan to pay yourself through your entire retirement.

4. Consider your timing on Social Security

You can begin drawing Social Security benefits at age 62. The major caveat is that your monthly benefits will be 25 percent lower than they would be at full retirement age of 66. If you plan to withdraw benefits early, adjust your retirement budget accordingly. If you plan to claim full benefits, you need to fill the gap with income from other sources. Remember if you earn income from work after tapping into Social Security (but prior to full retirement age), your Social Security benefits may be reduced based on the amount you earn.

5. Plan for health care coverage

If you retire before age 65 (the age at which you become eligible for Medicare), you need to find another source of health insurance coverage in the interim. Your former employer may offer retiree coverage, or you may have the option to continue coverage at your expense for a period of time (typically up to 18 months after you leave your job). If a spouse has coverage through an employer, that might be a cost-effective solution. Otherwise, you need to purchase coverage on the market. Keep in mind that as you grow older, health insurance tends to become more expensive. Make sure you budget for health insurance as you plan an early exit.

6. Prepare for unexpected expenses

As with any stage of life, unexpected events can occur that require a significant expense. You need a sufficient cash reserve in place to cover costs like a major home repair or medical issue. Also evaluate if long-term care coverage makes sense for you, in case you need specialized care later in life.

This checklist is just a start. A well thought out plan can help you begin retirement early with a sense of confidence you’ve taken the right steps to be properly prepared.

Scott D. Serfass, CFP®, CRPC®, CDFA™, CLU®, ChFC® is a financial advisor and senior partner of Serfass, Phillips & Associates, a financial advisory practice of Ameriprise Financial Services, Inc. His team specializes in helping people retire confidently and develop a plan to effectively share wealth across multiple generations. Throughout his career, he has witnessed many families continue to grow despite global and economic turmoil. This experience and research paved the way for his book, Family Succ

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Breaking News – Here Is The Type Of Business That Is Allowing People To Retire Early

There is a type of business that is rapidly becoming popular among employees around the world. This type of business is allowing people to retire early and is putting some serious income in the pockets of their owners. This type of business is called a home business. A home business is basically an opportunity to make money from home. You are able to make money and become financially independent while wearing your pajamas.

Employees are becoming extremely upset on how they are being treated by the corporate world. Employees have a rough work life. They wake up in the morning and basically dedicate their lives to a corporation that does nothing but gives them a paycheck to survive until they get paid again. Former employees are starting their own home business to not only make incredible income. There are also many benefits that come with owning their own business.

Here are the benefits they enjoy:

1. They say to start off, there is very little risk:

Most home businesses take roughly 700-800 dollars to start-up. After you start them up you need to work hard and keep your business running until it pays you back. Honestly speaking, most people give up and fail because they fail to realize that although a home business can offer many benefits, it is still a business and will require hard work in order for the owner to become wealthy. Most home businesses require up to 3 years of hard work until the big checks start pouring into the pockets of their owners. However, once the big checks start coming in, your life will change and you will be able to take care of not only yourself, but also your loved ones.

2. Flexibility:

People enjoy the flexibility that come with working from home. They do not have to be involved in a lifestyle that forces them to wake up early and deal with horrible co-workers or bosses. They rely on themselves to make money and the best part about being independent is that most of the earnings come to you and you get to inspire and change the lives of other people by being a great leader.

3. Personal Fulfillment:

Most people feel a personal achievement when they start their own home business. They are happy because the built something that will stand the test of time and will be of great use for their children and their children’s children.

Home businesses are rapidly becoming popular and who knows where they will be in the years to come.

There are organizations of experts who offer free reports to those who are serious in building incredible income from home.

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Controlling Your Health Care Costs in Retirement

It’s no secret that health care becomes a bigger concern for most of us as we grow older. More ailments are likely to develop, which means more money spent to visit health professionals and buy medication. Even if you remain healthy through your later years, the costs of preventative care and preparing for potential unexpected health situations are rising.

Health-related expenses will likely be one of the biggest components of your retirement budget. You need to be prepared to pay for comprehensive insurance coverage and potential out-of-pocket costs for care. Here are three strategies to help you manage this critical expense in retirement.

Understand how Medicare works

The good news for Americans age 65 and older is that you qualify for Medicare. That makes increased dependence on health care services more affordable. At age 65, most people automatically qualify for Medicare Part A at no cost, which primarily provides coverage for hospital stays and skilled nursing care. Medicare Part B must be purchased (approximately $109 per month in 2017 for most retirees). Part B covers the costs of visiting a physician, but with some deductibles. Many people purchase additional coverage to use for out-of-pocket expenses, such as a Part D prescription drug plan or a Medicare Supplement policy.

With Medicare, timing is important. Signing up when you first qualify for coverage will keep costs at the lowest level. If you maintain insurance through your employer after turning 65, you can delay Medicare enrollment without risking late penalties.

If you retire prior to age 65, you will need to purchase insurance on the open market to cover health-related expenses until you become eligible for Medicare. Individual coverage tends to get more expensive as you grow older, so work the cost into your retirement budget. Some employers offer retiree health insurance as a benefit. Check with your human resources department to see if this option is available to you.

Allocate sufficient funds for health care costs

As you develop your retirement income strategy, make sure you have money set aside for health expenses that will be your responsibility. By one estimate, the average 66-year-old couple will need to tap more than half of their lifetime pre-tax Social Security benefits to pay for health care expenses throughout retirement. Most people will likely have to rely, in part, on their own savings to help offset some medical expenses.

Along with other retirement savings, you may want to establish a health savings account (HSA) during your working years. HSAs are designed to help build tax-advantaged savings to pay for out-of-pocket medical expenses you incur during your working years. However, any leftover funds can be applied to health expenses later in life, including premiums for Medicare and long-term care insurance. Keep in mind that you must be enrolled in a high deductible health plan to open an HSA.

Focus on your own health

One way to potentially keep health care costs under control in retirement is to create or maintain a healthy lifestyle. Small changes you make today, such as eating right or prioritizing sleep, could reduce the likelihood that medical issues will impact you later in life. Being physically active may also benefit your finances in retirement – according to the American Heart Association, it could potentially help you save $500 a year today on health-related expenses.

Having a plan doesn’t guarantee that you will avoid heath issues, but you may find comfort in knowing how you can tackle health care costs in retirement.

Scott D. Serfass, CFP®, CRPC®, CDFA™, CLU®, ChFC® is a financial advisor and senior partner of Serfass, Phillips & Associates, a financial advisory practice of Ameriprise Financial Services, Inc. His team specializes in helping people retire confidently and develop a plan to effectively share wealth across multiple generations. Throughout his career, he has witnessed many families continue to grow despite global and economic turmoil. This experience and research paved the way for his book, Family Success.

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