As people prepare for retirement, there are many issues to consider, but one trumps them all, according to an expert.
“Where you live is probably the most important retirement decision you make because of the differences in taxes in different states,” Silvur founder and CEO Rhian Horgan told Yahoo Finance Live (video above) offering advice to people nearing retirement on how to do it. plan ahead
The second big decision people should think about? Health care.
“With the average retiree spending more than $5,000 a year on healthcare and retirement costs, it’s something they really have to plan for,” Horgan said. , they are taking a much more proactive step and adding retirement health care costs to their budgets.”
Horgan provided three more tips on how to save more for retirement in 2023, especially after the stock market turmoil in 2022. Here’s what he had to say.
Know where you are today
It’s hard to know where to go if you don’t know where your savings are today.
“Update your account balances. Again, if you’re working with numbers from last year, they’re probably not correct. So update the numbers,” Horgan said.
For example, those who stopped looking at their 401(k) or other retirement account balances after a dismal first quarter last year may be mildly surprised to see their balances pick up a bit in the last quarter of the year. For example, the S&P 500 rallied 7% in the fourth quarter after falling 25% in the previous three quarters.
Understand your expenses
In addition to calculating checking account balances, Horgan told Yahoo Finance Live that consumers should also keep track of their spending. Although inflation slowed to 6.5% in December, it can still affect people’s monthly budgets.
“When you’re updating your numbers, don’t just think about updating your financial savings numbers, but about spending as well. Spending is really about making sure you understand how the inflationary environment is affecting your monthly spending and what it will be going forward,” Horgan said.
Calculate your retirement income
Workers should not forget to add expected Social Security benefits to their other sources of retirement income to get a clear idea of what to expect in retirement. Social Security’s recent cost-of-living increase should help boost people’s bottom line income in retirement.
“I would also think about retirement income, get a check to see what your retirement income looks like. Last year, Social Security increased the cost of living adjustment by about 8.7%. So it’s likely that your projected retirement income will actually be higher going forward than it was the last time you checked,” Horgan said.
Despite fears that people won’t have enough saved for retirement, Horgan said it’s never too late to start investing to save for the future.
“I think as consumers start the year, the most important thing to keep in mind is that most consumers have time on their side. Investing is really critical right now,” Horgan said.
Investing for retirement is a long game, he stressed, so forget about the daily fluctuations of the market.
“Most retirees are really thinking about investing for 10, 20 or 30 years,” Horgan said. “It’s not about timing the market perfectly, it’s about thinking about putting your capital to work over the next few quarters.”
Ella Vincent is the personal finance reporter for Yahoo Finance. Follow her on Twitter @bookgirlchicago
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