It’s estimated that 10,000 Baby Boomers will turn 65 every single day from now through the year 2030. That means we will have more people than ever before retiring. And even though you may only be in your fifties right now, will you be ready to retire when the time comes?
How much do you need saved? When should you take your Social Security?
The American College of Financial Services regularly evaluates people with a retirement income literacy quiz. The test essentially examines how much you know about retirement. In 2020, eight out of 10 individuals who took it failed. Could you pass?
“The primary thing they should know is, ‘How much is my retirement going to cost me?’” said Jeannette Bajalia, the President/Founder of Women’s Work.
Let’s test your knowledge: a 65-year-old man has an average life expectancy of 10, 15, 20, or 25 more years? The correct answer is 20 years! But more than half of respondents underestimate life expectancy.
Should you take Social Security at 62 or wait until 70?
“Social security was intended to represent a very small portion of your retirement income,” Bajalia states.
For every year you delay taking Social Security, you will get an 8% increase in your benefit until age 70. But each person needs to consider their health and retirement lifestyle to determine whether to wait.
What about this one: Medicare typically pays for the costs of a nursing home for the first year? That would be false! Medicare does not generally pay for long-term care. Medicaid pays for nursing homes and that only kicks in after your finances fall below a specific level.
And one more: what proportion of the population will need long-term care at some point? The answer is 70%! Hopefully, we will all make it to a ripe old, healthy age, but it’s always good to be prepared.
One more question: How much savings should you have to retire? The recommended retirement savings amount is up to four times your annual salary.
You can take the entire retirement income literacy quiz online. Go to https://retirement.theamericancollege.edu/2020-retirement-income-literacy-survey.