Plan ahead financially for retirement, expert says

Retirement is an exciting time for many people.

But are people as prepared as they can be for the road ahead after they stop working?

Mark Intermill, assistant state director for advocacy for the American Association of Retired Persons in Nebraska, said most people he talks to are prepared. However, he cautioned that there is more to prepare for than a lot of people might think.

He said AARP has four pillars for retirement security and the first one begins with Social Security.

“A person can request a report of their Social Security account to see what they can expect,” Intermill said. “(The amount of payments) surprises people and gives them incentive to do things themselves.”

Social Security on average pays about 40 percent of the monthly salary. People of any age can request their report to see where they stand.

Social Security payments must be set up at a local Social Security office and generally start about one month after a person turns 65.

“You can defer receiving payments until you are 70 and your monthly benefit will be larger,” Intermill said. “That's something people should look at.”

The second pillar for retirement security, AARP said, is savings and pension. He suggested anyone who has the opportunity to participate in an employer match 401(k) fund do so and spoke of a new Nebraska program.

“In Nebraska we now have a long-term care savings plan where you can set aside funds in a long-term care savings account,” Intermill said, adding that it's similar to college savings plans. “Often when people retire, they can't afford their long-term care insurance premiums.”

The new savings plan can begin paying for insurance premiums for people as young as 50 years old if retired at that age. Separate long-term care insurance accounts pay for assisted living and nursing home care, but only if the person pays premiums up until admittance to such a facility.

The third AARP pillar for retirement security is income from employment earnings after retirement.

“It's not always in the same line of work, or many hours,” Intermill said. “Oftentimes people overlook the time you have on your hands after you retire. Work provides social connection as well as income.”

The final AARP pillar is health insurance.

“One hospitalization can wipe out a person,” Intermill said. “Medicare doesn't kick in until 65 and Medicare doesn't cover long-term care. People are frequently retiring before they qualify for Medicare.”

He said oftentimes the main deterrent to early retirement is maintaining healthcare insurance.

“Sometimes the option is essentially to keep working,” Intermill said.

The other option is to save enough money to cover high healthcare premiums until a person reaches 65.

People must sign up for Medicare with a local representative and the federal insurance kicks in at 65. He said about two-thirds of Medicaid coverage is for nursing homes.

A lot of times people have to get a job after retirement just to pay insurance and make ends meet.

“It seems like more people are getting part-time jobs. We do have a high number of people over 65 still working,” Intermill said. “When I travel around rural areas, I see a lot of retired people in service jobs. Usually they're either bored out of their minds or they just don't have the money to live otherwise.”

He said people need to know what they want for their future when considering retirement.

“You have to know what you want out of retirement,” Intermill said. “The big thing is what are you going to do with your time. Stay connected, volunteer and keep active.”