How to plan for retirement without having an existential crisis

On the Money is a monthly advice column. If you need advice about spending, saving, investing, or the complicated emotions that arise when preparing to make a big financial decision, you can: Submit your question using this form.

I want to know what financial experts suggest about planning for the future. There seems to be a lot of uncertainty. And as a Millennial, there is a huge disparity in income within my generation.If they Raise the retirement age to 70 years old• What if something else changes before Millennials retire?

I don’t know if you know much about Dale Carnegie, but in addition to writing famous self-help books, How to win friends and influence peoplehe also wrote a slightly less popular book called . How to stop worrying and start living.

There’s a reason How to win friends and influence people It’s the kind of book everyone has heard of; How to stop worrying and start living it’s not. After all, everyone wants to become an influencer, but not everyone is ready to put in the work necessary to stop worrying and start living.

As Carnegie explains, one of the first tasks is to imagine the worst possible worst-case scenario.

Then ask yourself what you can do to prevent or embrace that worst-case scenario, Carnegie advises.

And this is why no one reads this book anymore. you have to.

In your case, you’re concerned about the federal government raising the retirement age to 70. This is not an unwarranted concern. I’m a “millennial” so I was alive when the government took action. Raised the retirement age from 65 to 67And it’s not that far-fetched to imagine a future where you can begin receiving your full Social Security benefits only after your 70th birthday.

Can either of us prevent this scenario? It may change depending on how we vote in the next few elections, but it is unlikely to have a direct impact Probably.

This means that you should accept this scenario as a possibility. And to stop worrying and start living, you need to plan for a future where you won’t receive your full Social Security benefits until age 70.A future that is no longer allowed Receive partial benefits if you retire early.

Does that mean you need to put more money into savings or investments each month? Not necessarily. Depending on his current retirement plan, the compound interest associated with accumulated assets could help cover his three-year gap from age 67 to his 70s. On the other hand, in a bear market (a bad one), your portfolio can lose value. No matter how much you save over the next 30 years.

This is why I always advise people to focus on savings vehicles that offer guaranteed returns. CD ladder, and ways to build wealth that aren’t directly related to investing. Getting a promotion, or even changing jobs, can make you much more money than you would from a mutual fund. Moving to an area with a lower cost of living not only allows you to save more, but also allows you to take advantage of opportunities that might otherwise be difficult to achieve, such as home ownership. Living close to family or within a strong community can also provide support during difficult times. And if you live in an area where you can participate in your favorite activities with your loved ones, you may be less likely to spend money on distractions like impulse purchases, streaming media, and expensive vacations. This could give them the economic and social resources to help others in need, and is one way he addresses the problem of income inequality that pervades almost every generation. .

All of these changes require effort and some have initial costs. This is another reason. How to stop worrying and start living It never caught on as a self-help book. Still, this is a pretty good template to help you prepare for the uncertainties of the next 30 years.

Why save money? I am retired. You can’t take it with you…

No, I can not. As long as you have enough savings to cover the cost for the remainder of your estimated lifespan (taking into account inflation, of course) and the money you need for end-of-life care (which is more expensive than most people), please understand. ), you can spend the rest of your time on personal enjoyment if you wish.

However, I encourage you to stop thinking about taking it home and start thinking about how you can give back. Do you really want your life’s work to end up in the pockets of Amazon or Margaritaville? Is there someone a little closer to home who could benefit from your legacy?

For example, if you have a community of family and friends who have provided comfort, support, and connection throughout your life, ask yourself if you have additional resources to provide support in return. Some leave a legacy. Some people make financial gifts during their lifetime. If you don’t want to spend your financial resources, consider taking your time. Driving your friend to the hospital, being present when they meet with the medical team, and taking notes on the recommended treatment plan are some of the best things you can do for your loved one.

If you don’t have a lot of close family or friends at the moment, consider supporting an organization or community cause, and consider volunteering to make a little more of a direct connection. They’re worth more than you think, especially as the decades go by.

There is one more factor to consider. It’s whether you qualify for Medicaid later in life. If you’re considering Medicaid as an option, perhaps after you’ve used up your last savings, you may want to set up a meeting with a financial advisor to discuss how to ethically take advantage of this government assistance program. Medicaid is designed to help low-income families access health care, and many older Americans rely on both Medicaid and Medicare (the federal health insurance program) to manage expenses as they age. I am.

However, accessing Medicaid can place a burden on surviving families. Many people do not realize that Medicaid may be able to claim remaining financial assets to cover the cost of providing end-of-life care, including real estate.Recent New York Times articles “When Medicaid comes after the family home.” provides a good overview of what to expect, so read it carefully and incorporate it into your long-term financial planning. It’s also worth remembering that Medicaid’s infamous five-year “look-back period” prevents people from gifting or donating assets immediately before applying for benefits. Some people establish trusts to preserve assets while remaining eligible for Medicaid, but such issues should be discussed with a professional.

As an advice columnist, I can tell you: You already know where your money can’t go, so think carefully about where you want to spend it, and make sure your family and finances Talk to an expert. The remaining assets will be distributed in a way that feels meaningful to you and your loved ones.