Americans’ confidence they can live comfortably in retirement has dropped the most since the global financial crisis in 2008, according to a recent report from the Employee Benefit Research Institute and Greenwald Research.
One reason is high inflation, which has reduced both workers’ and retirees’ belief that their retirement preparations will sustain them, according to the research.
Another reason is many feel they do not have enough saved.
If you’re approaching retirement, the good news is there are still moves you can make to shore up your financial position.
“If you don’t have retirement savings at this point, it’s never too late to start,” said David John, senior strategic policy advisor at the AARP Public Policy Institute.
Additionally, other key decisions you will face can help you save more money. Here’s a look at four of them:
1. Decide where you will live in retirement
— Key deadline to watch: The sooner, the better.
When it comes to lifestyle, many retirees would prefer to age in place. Yet, it’s important to consider whether your current home will still suit you as you age, according to Craig Copeland, director of wealth benefits research at EBRI.
When it comes to preparing a strategy for where to live in retirement, the sooner, the better, he said.
“Once you have any mobility issues, you really need to be moving on it,” Copeland said. If you plan to relocate, you may want to do it early before health issues set in, he added.
Alternatively, if you plan to age in place, making some upgrades now, such as putting guardrails or handrails on stairs, may help smooth the transition if and when your health declines.
Finding a place to live in retirement won’t look the same for everyone, noted Susan Reinhard, senior vice president and director of the AARP Public Policy Institute.
Notably, there is no one-size-fits-all answer. While some people may downsize, others may want more room to accommodate grandchildren. “It’s called right sizing for you,” Reinhard said.
While deciding where to live, people would also be wise to make other provisions for their care, including establishing or updating advance directives, which are legal documents that express your wishes in the event you are no longer able to care for yourself.
It’s also helpful to create medical records and to have conversations with family members who you would want to help in the event you need medical attention, Reinhard noted.
2. Come up with a Medicare strategy
— Key deadline to watch: Your 65th birthday.
While you may start your Social Security retirement benefits as early as age 62, eligibility for Medicare generally does not start until age 65.
An initial enrollment period starts three months before you turn 65, includes your birth month and goes three months after the month you turn 65, for a total of seven months.
That goes for Medicare Part A, which covers inpatient hospital care, skilled nursing facility care, nursing home care, hospice care and home health care, as well as Medicare Part B, which covers diagnostic and preventive care services.
A small portion of people may be automatically enrolled if they are already receiving Social Security benefits, noted Jane Sung, senior strategic policy advisor at the AARP Public Policy Institute.
For others, their 65th birthday, and the surrounding months that make up their initial enrollment period, are a key date to watch.
“Don’t wait until the last week of your initial enrollment period, because it is complex,” Sung said.
If you’re still working and have health care coverage through an employer, you may decide not to sign up right away when you turn 65, she said.
Those who opt for traditional Medicare may also want to add Medigap plans, which can help cover out-of-pocket costs, or Medicare Part D, for prescription drug coverage.
Alternatively, people may opt for Medicare Part C, otherwise known as Advantage plans, which are offered through private insurance and include Medicare Parts A and B, and oftentimes other coverage areas.
To help sort through the choices, the AARP offers a Medicare enrollment guide and other resources.
State Health Insurance Assistance Programs, also known as SHIP, also provide guidance to Medicare beneficiaries.
In addition, some people may qualify for financial help through Medicare savings programs if they have income or resources below certain limits.
The key is to be proactive and do your research.
“Certainly, I think six months, four months before your 65th birthday is a great time to start thinking about learning more about Medicare and the different choices available out there,” Sung said.
3. Choose when to claim Social Security benefits
— Key deadline to watch: By age 60, you should go to the Social Security Administration website and review your statement, recommends Copeland.
When to claim Social Security retirement benefits is one of the big questions retirees face.
Most experts generally recommend waiting beyond age 62, the earliest eligibility age. At full retirement age — 66 to 67, depending on your date of birth — you will receive 100% of the benefits you earned. But for every year you delay past full retirement age up to age 70, you will get an 8% boost — a guaranteed return that’s hard to beat in the markets or elsewhere.
It’s important to note those benefits are also inflation-adjusted, unlike most other sources of income, explained John of the AARP Public Policy Institute.
“The later you can file for Social Security, the better it is as far as the amount you’re going to get,” John said.
By your early 60s, you should be reviewing your earnings record to make sure it’s correct, Copeland said, as that is what will be used to calculate your benefits.
At that time, you will also be able to get a sense of how large your monthly benefit check will be if you claim at ages 62, 67 (provided that’s your full retirement age) and 70.
4. Check if you can save more
— Key deadline to watch: Check in at least 10 years away from retirement.
For many people, the idea of retirement doesn’t become a reality until around age 45, according to John.
By the time you’re about a decade away from retirement, it’s a good idea to give some serious thought to your retirement goals while you’re still working and have time to build up your savings and make other arrangements, he said.
Even so, no matter where you are in relation to retirement, you can still make progress.
“It’s never too late to start,” John said. “Having any level of savings is better than having no savings at all.”
