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Will Your Money Last?
Taking the financial uncertainty out of your retirement is crucial to enjoying one of the best stages in your life. After you retire, depending on the lifestyle you have, you may incur higher expenses than you anticipated.
At this stage in your life, you need a reliable team to guide you. A Financial Advisor will:
- Identify the best plan to save for retirement, taking into consideration your financial situation and your risk tolerance
- Develop a flexible long-term plan to balance your retirement goals with those more immediate goals, such as traveling, purchasing a home, or sending your children/grandchildren to college.
- Assess your goals and help you decide whether lump-sum options are right for you.
Retirement for United Nations Staff
If you are a UN staff member, it is important to note your retirement age; if you were hired before 1990, your mandatory retirement age is sixty(60); if hired after 1990, your mandatory retirement age is sixty-two (62).
According to the most recent statistics available from the National Center for Health Statistics, the average American male can expect to live seventy-four (74) years, and the average American female eighty (80) years. This is a significant increase from 1950, when the average American male was expected to live sixty-six (66) years, and the female seventy-two (72) years. Similarly, there has also been an increase in life expectancy in Europe. In 1950, the average European male was expected to live sixty-eight (68) years, and the female seventy-five (75) years. The average European male can now expect to live seventy-three (73) years, and the female eighty-one (81) years. A member of the UN staff who was hired before 1991, for instance, will spend on average 14.4 years in retirement.
Right Before You Retire
As you prepare to enter retirement, there are issues you should consider to ensure that your transition into retirement is a smooth one. Use the checklist below to guide you in your preparations:
1. Meet with a UNFCU Financial Advisor A significant portion of our resources are dedicated to assisting members with their retirement planning needs. Our advisors regularly work with members to plan for retirement, as well as to address retirement and post-retirement issues. In addition, the Investment Centre has a Certified Retirement Planner on staff.
2. Determine Your Retirement Expenses As you develop your retirement budget, be sure to consider how your lifestyle might change over the next twenty-five to thirty (25-30) years. You could find that your cost of living actually increases during retirement with additional activities, such as travel, hobbies and entertainment. Health care costs may significantly increase during mid- and late-retirement, and financial responsibility for an elderly parent or a young child/grandchild could be an additional consideration. Note that if you plan to move, a change in the local average cost of living may also affect your retirement expenses.
Because needs vary from person to person, it is a good idea to review every expense, from charitable contributions and gifts to basic necessities, to get a clear understanding of what your retirement will actually cost.
3. Review Your Insurance Coverage with Your Financial Advisor Your insurance needs may change in retirement just as your financial priorities and responsibilities shift. You should ensure that you review your life, health, homeowners, and auto insurance policies so that your coverage is appropriate for your new lifestyle. You may find that life insurance has become more of a consideration because it could help meet your estate planning goals.
Prescription medications or other medical expenses may no longer be covered by your employer or insurance, so it is important to investigate how your health coverage may be impacted after you retire.
For those of our members who are relying on UN benefits for life insurance, your Financial Advisor will review your benefit plan with you, and assess whether or not additional coverage may be appropriate for you.
Your UNFCU Financial Advisor will also help you consider Long-Term Care (LTC) insurance options. If you currently have LTC insurance, meet with your Financial Advisor to determine if this coverage sufficiently meets your needs.
Homeowners insurance is another key consideration, as your home is usually your single biggest investment and securing it is a critical priority.
4. Speak with the United Nations Joint Staff Pension Fund Many of our members receive their retirement benefits through the UN. It is recommended that you visit UNJSPF for an estimate of your retirement savings, and that you are well-informed on the process, timelines, and options for your retirement plan assets. Your Financial Advisor will review your benefit plan to determine if it supports your retirement plan, or if you need to consider additional retirement coverage.
5. Know When to Apply for Your Social Security Benefits (for US. Members) You will need to apply for Social Security three months prior to the month of your 65th birthday or three months before you wish to start collecting benefits. At the earliest, you may apply at sixty-one (61) years and nine (9) months of age, although benefit reductions apply depending on your full retirement age (determined by year of birth) and personal situation.
Because the rules and options can be rather complex, you may wish to start speaking with your Financial Advisor a year before you plan to retire.
6. Develop a Retirement Income Plan A number of factors may impact your plan: lifespan, distribution rate (how much you withdraw each year), inflation, taxes, market volatility, rate of return, healthcare costs, and your estate goals. It is important to understand where your income is coming from and whether your sources are exhaustible or lifelong.
7. Review Wills, Trusts, Powers of Attorney, and Beneficiaries A will by itself may not be enough to protect your assets and help reduce estate taxes and/or other costs, so you may want to look into setting up a trust. Also, be aware that a "Power of Attorney" and a "Durable Power of Attorney for Health Care" are not the same; the former deals with the control of assets, among other matters, while the latter only provides for health care decisions.
Your Financial Advisor will review your financial plan, and confer with your legal consultants to ensure that your concerns are thoroughly addressed. Special consideration may also have to be given to wills from other countries. The Investment Centre can provide you with referrals to international estate and tax planners.
Legal provisions you have made at other life stages may need to be adjusted to be more appropriate for your current situation. Perhaps your marital status has changed or your estate size and complexity is now different than when you originally drew up your estate documents. It is recommended that you take the time to reconsider the relevance and effectiveness of your documents as you near retirement.
8. Set Aside Emergency Funds Setting aside funds for unforeseen circumstances will ensure that you avoid using assets allocated to income or for growth purposes. Not having to worry about how you are going to pay for unanticipated events, such as car repairs or family travel, will make your retirement years less stressful.
Your emergency fund should be held in a liquid, interest-bearing account, so that you may access your money without penalties, while earning interest. And remember to replace emergency funds as you use them, so that they are available for the next event.
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