Challenges in retirement planning lurk well beyond just getting started, but there are solutions.
Catholic United Financial sales representative Mary Harens discussed with The Catholic Spirit such challenges that people face in retirement planning and possible solutions for each.
1. Waiting too long
People can fall into this pitfall easily because of the hectic pace and busyness of daily life. Legitimate financial demands and the consumer culture can hurt saving, too.
“It’s never too late to start saving,” Harens said. “However, it’s most advantageous to start early.”
Harens recommends looking into free seminars about retirement planning to get started. Then, people need to look for a guide.
2. Intimidation
The jargon in the financial field alone could cause people to delay looking into retirement planning. Moreover, each person has much to consider when looking at life after work.
“A lot of people don’t understand the vocabulary and the principles,” Harens said. “Rightly so, the laws change, so the game changes.”
Competent financial planners understand the field and communicate it effectively. Once clients have that information, they need to keep making retirement planning a priority.
3. Tax law changes
Here’s a curve ball everyone needs to watch out for in retirement planning. Tax laws can change over time, which can impact how retirement products perform.
“People aren’t always aware what that means or how that impacts for better or for worse their retirement situation,” Harens said.
She advises consulting with a certified public accountant and/or a professional who specializes in retirement. Learning how to time withdrawals, tax consequences, fund distribution and current applicable laws all play a critical role.
4. Health care
Planning retirement well includes planning for the unexpected, which health care often tosses into the mix of considerations.
“The cost of health care is a wild card,” Harens said. “There are personal dimensions to that based on our personal health, which is a wild card. Then, there’s [a] whole field of health care and premiums for that, and government regulations on that are changing and increasing.”
Transitioning from an employer health insurance plan to a plan after retirement also plays a role.
“Now, all those benefits are different [after retirement], or they don’t have them,” Harens said.
Family history, current health and habits can impact costs. It still leaves lots of room for unpredictability, but one aspect remains certain.
“Typically, health care costs will increase, not decrease,” Harens said.
5. Social Security
While people find plenty of unpredictability with Social Security, they can quickly find information. Harens recommends visiting http://www.ssa.gov for information.
“People can look at that and see what their projected social security income would be, which is not really going to be sufficient,” Harens said. “But to get an idea of what that element will be as far as their retirement picture, what that will provide for them.”
Changes in how long people live, stay in the workforce and when people retire will all impact Social Security. Longer lives and careers warrant not depending on Social Security alone though.
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