The 4 Best Tools to Keep You Safe in Retirement

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Retirement is the most complicated time in your life, financially. That’s driven by many factors, including: (1) you don’t know how long your retirement will last, (2) you won’t have a traditional salary coming in the door, and (3) you might not have the same mental capacities as you do now to make financial decisions.

The complicated nature of retirement has increased over time as life expectancy has increased — from around 60 years in 1930 to closer to 80 years today — and pensions have gone away. Maybe your parent or grandparent has a pension? That pension, which might not seem like a big deal when you’re young, makes a big difference in retirement. It fixes all three issues listed above by providing you a continuation of your salary for as long as you live. Now, not only are employers not offering them, but many of us don’t have traditional jobs with benefits in the first place.

Still, for all of us DIYers out there who know how to take control our financial lives and make things happen, there are solutions for us. To make sure we’re financially comfortable and safe in retirement, we need to be aware of the risks and take the right steps to be protected. This of course means thinking about this and planning ahead years before we expect to retire.

Here are the 4 best tools to keep you safe in retirement:

1 – Social Security (I’m serious here…)

Social Security is the golden child of retirement planning. It is THE BEST option we have out there to keep us safe. It’s basically a pension provided by the government. Here’s how it works: While you’re working and paying taxes, you earn Social Security credits. As long as you’ve earned at least 40 credits (1 credit for every $1,320 you make, max of 4 credits per year), you’ll qualify to receive benefits in retirement. The more credits you earn, the more your benefit, which is a monthly paycheck in retirement, will be. That monthly check can start between ages 62-70 and will continue for life, each year potentially increasing for inflation. The longer you wait to start it, the more your benefit will be.

To take full advantage of Social Security, do the following:

  1. Maximize your credits by making sure your reported taxable income is at least $5,280 every year. (This number is based on the 2018 credit value of $1,320 which does go up over time.)

  2. Plan to delay the start of your Social Security to the maximum age of 70. You’ll get an 8% increase in your benefit each year you delay them past full retirement age (67).

  3. Keep track of your Social Security benefit by creating an account. Knowing how much you’ll be receiving each month will make it easier for you to plan how you’ll cover the remaining expenses that exceed your benefits.

2 – Blueprint Income’s Personal Pension

Employers have decided to stop offering pensions, instead providing better access to the stock & bond markets through 401(k)s. But, you can still get yourself the benefits of a pension — steady, guaranteed income that continues for life — independent of what your employer offers. Blueprint Income’s Personal Pension is an account you create and fund just like you fund your 401(k), IRA, or brokerage account. But, instead of putting money in the market, the money in your Personal Pension gets converted into guaranteed, lifelong income backed by insurance companies, of which Blueprint Income has 15 on their platform. (The technical product that makes this possible is called an income annuity, which is what the first generation of pensions used.)

Use the Personal Pension to supplement your Social Security so that all of your most important expenses in retirement will be covered no matter how long you live, and even if the market crashes. Here’s what to do:

  1. Head to Blueprint Income to build a Personal Pension plan. You can set a goal for how much income you want in retirement and they’ll tell you how much to put in over time.

  2. If you have an idea of how much your basic expenses will be in retirement, use that minus Social Security as your income goal. If you don’t know, just set it at $2,000 per month and work with their time to refine it later.

  3. Decide where the money to open the account will come from (minimum of $5,000). You can use existing retirement savings (Traditional IRA, Roth IRA, 401(k) rollover) or new savings from your bank account.

  4. Then, keep contributing over time as little as $100 per month to build up your retirement check. If something happens, you can always skip/cancel/change contributions without penalty.

3 – Tomorrow, The Family Financial Planning App

The first two tools protect you from the risk that you live longer than expected and the risk that the stock market crashes. But, what will happen when you pass away? Not only is that emotionally challenging for your loved ones, it can also create very complicated financial situations for them. The Tomorrow app provides a super easy and user-friendly way to make important long-term financial decisions and set up appropriate wills and insurance contracts.

Here’s what you can do through the Tomorrow app:

  1. Create a last will & testament for free. Having a will is important because it specifies who will be the guardian of your kids and pets and specifies what should happen to your assets.

  2. Create a trust fund, which when paired with a will, has the benefit of protecting your privacy, reducing probate costs, and allowing for better distribution of your assets.

  3. Determine and buy the right amount of term life insurance. This is the simplest form of protection for your family over the period of time that a premature death would harm them financially.

4 – EverSafe, Protection from Fraud, Scams & Financial Exploitation

At the beginning, I mentioned that retirement becomes a risky time in your life because of your potentially diminished cognitive capabilities. This reality makes seniors easy targets for financial abuse and exploitation. Elder financial abuse can take many forms, including petty theft, fraud, scams, misguided home repairs and bad financial advice. EverSafe is a personal detection and alert system that stops exploiters from taking advantage of you.

Consider signing up for EverSafe as you approach retirement, or for your loved ones who are already in retirement, to get the following services:

  1. Analysis of your daily transactions for erratic activity and anomalies like unusual withdrawals, missing deposits, etc.

  2. Alerts by email text, or phone to you and your trusted advocates when suspicious activity occurs.

  3. Tools to manage and resolve any fraudulent activity.

With these tools, plus all of the good day-to-day and long term financial sense I know you already have, you’ll set yourself up for a comfortable retirement where, ideally, you never even have to think about money or risk!

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