When we talk about planning for retirement, we’re usually referring to financial objectives and income strategies. These things are important, but they’re not the only ways to adequately prepare for retirement. In addition to creating an income strategy, consider developing a specific plan for what you want to do — day in and day out — for a retirement that could last 20 to 30 years.
After all, knowing what you want to do in retirement can help put a number on how much money you’ll need to save. For example, a retiree with big travel plans will likely need a larger nest egg than someone cultivating a vegetable garden. Give us a call; we’d love to meet with you to discuss your specific goals in detail and begin drafting a detailed financial strategy.
For many people, retirement is a time to do all the things they never had time to do before. Merrill Lynch found that people between ages 65 and 74 reported having more fun than any other age group. However, it’s easy to sink into daily routines that can lead to boredom and lethargy.1
To help maximize your enjoyment in retirement, plan to have a plan. For example, carve out time for your passions or develop a new interest. Get out of the house regularly to discover places you’ve always wanted to visit — a local museum or restaurant, a neighboring city or a far-flung exotic locale. The top criteria retirees use when seeking new adventures are the arts, fine dining, learning, volunteering, outdoor water activities, outdoor land activities and — in its own category — golf.2
1 William P. Barrett. Forbes. July 14, 2017. “25 Great Places To Follow Your Passions In Retirement In 2017.” https://www.forbes.com/sites/williampbarrett/2017/07/14/great-places-to-follow-your-passions-in-retirement-in-2017/#3d003f0c92df.
Accessed May 10, 2018.
The Perks of Working Longer
Despite the sometimes-negative connotations associated with being labeled a “workaholic” — someone addicted to working long hours — a survey of more than 750 employees at a large international consulting firm found that there actually may be health benefits.1
The study’s objective was to determine if employees who identify as workaholics were more prone to developing metabolic syndrome, an umbrella term describing the onset of multiple conditions such as high blood pressure, high blood sugar, abnormal cholesterol and excess waistline fat. All of these conditions, particularly when combined, are known to increase the risk of developing heart disease, stroke and diabetes.2
However, not all people who work long hours demonstrated a higher risk of developing metabolic syndrome. In fact, the workaholics who were truly engaged in their jobs appeared to have no more risk of developing these chronic conditions than the average non-workaholic employee.3 These employees reported having strong time management and communication skills as well as a solid support network, both personally and professionally.4
By contrast, people who worked long hours but were worn out, were disengaged and lost sleep worrying about work were prone to developing metabolic syndrome.5
This is an important factor to consider when developing a retirement income strategy. Many people plan to work past traditional retirement age to have more time to save, invest and accrue higher Social Security and/or pension benefits. This may be a great idea for people who love their jobs, enjoy working and receive a great deal of fulfillment from their work. However, for people who are dissatisfied with their jobs or employers or have a spouse encouraging retirement, the decision may be more complex. In these cases, continuing to work past traditional retirement age may be detrimental to both health and happiness.
Of course, the more health problems you develop, the more money you may need to pay for medical expenses throughout retirement. It’s important to consider retiring when you can afford it and developing a daily regimen of healthy habits to help avoid expensive medical bills.
There are many variables to consider when deciding the best time to retire. A workaholic may weigh the advantages of continuing work for health and financial benefits versus a potentially lower retirement income with less work-induced stress. Remember, we’re always ready to discuss your retirement income strategy with you.
1 Knowledge@Wharton. Nov. 29, 2017. “The Truth About Being a Workaholic: Why It Isn’t Always Bad for You.” http://knowledge.wharton.upenn.edu/article/truth-workaholics-isnt-always-bad/. Accessed May 10, 2018.
3 Lieke L. Ten Brummelhuis, Nancy P. Rothbard, Benjamin Uhrich. Academy of Management. Sept. 19, 2016. “Beyond Nine To Five: Is Working To Excess Bad for Health?” https://journals.aom.org/doi/abs/10.5465/amd.2015.0115. Accessed May 23, 2018.
4 Knowledge@Wharton. Nov. 29, 2017. “The Truth About Being a Workaholic: Why It Isn’t Always Bad for You.” http://knowledge.wharton.upenn.edu/article/truth-workaholics-isnt-always-bad/. Accessed May 10, 2018.
2018 HSA Contribution Limits
A health savings account (HSA), when paired with a high-deductible health insurance plan, allows the owner to set aside money on a pre-tax basis to pay for healthcare expenses. When used exclusively for qualified medical expenses, contributions and earned interest are not taxed. Funds used for purposes other than qualified medical expenses are subject to ordinary income taxes, in addition to a 20 percent penalty tax if you are under the age of 65. The 20 percent penalty tax no longer applies for those age 65 and older.1
The following are plan contribution limits for 2018:2
- Individual plan: $3,450
- Family plan: $6,900
Note that account owners age 55 or older can make an additional $1,000 catch-up contribution for either an individual or family plan.3
Neither our firm nor its agents may give tax advice. Be sure to speak with a qualified professional about your unique situation.
1 HSA Edge. Oct. 28, 2017. “Using HSA Funds Once You Turn 65 Years Old.” https://www.hsaedge.com/2017/10/28/using-hsa-funds-once-you-turn-65-years-old/. Accessed June 4, 2018.
2 Benefit Resource, Inc. April 30, 2018. “Reverse decision 2018 HSA Limits Remain.” https://www.benefitresource.com/blog/2018-hsa-limits-announced/. Accessed May 10, 2018.