Retirement Planning

Retirement is a long process that begins years in advance. To have a successful and happy retired life, one must plan ahead. There are three major topics that you will need to address if you are to have a worthwhile retirement.

Housing

Housing for the elderly is a sensitive issue. Some feel that just because someone is older does not mean they should have to live any differently. For others, they appreciate the peace of mind they have by knowing they are safely taken care of by trained professionals.

One housing option for retirees is a nursing home. Nursing homes are typically for people who require medical attention or constant care. Many residences within nursing homes cannot perform activities of daily living (ADL). ADL’s are the medical term to describe the functionality or lack of for an individual. Basic ADL’s include personal hygiene, moving around, urinary control, eating and undressing. Instrumental ADL’s (IADL) are not required during evaluations but are the deciding factors when choosing between nursing homes and assisted living. These activities include preparing meals, taking medications, using the telephone and managing money. For those who cannot perform the majority of ADL’s and IADL’s, nursing homes are good options to insure they are well cared for.
The next option is independent living. Independent living is on the other side of the spectrum as far as nursing homes are concerned. These communities provide more independence for mature adults who wish to live with people their age but are fully capable of daily living. Many find independent living beneficial because they do not have to deal with the hassle of owning and maintaining a home. These communities usually provide trips, social activities and prepared meals. The main benefit of this housing type is for social activities since it becomes more difficult to socialize with age.

Assisted living is an option that has the best of both worlds. Assisted living is also known as adult congregate living care, adult living facilities, adult homes and retirement residences. Assisted living is for those who only need assistance with certain day to day activities. Those who are seen as being forgetful, needing help preparing meals or needing help getting dressed are often referred to assisted care facilities. Residents in assisted care facilities usually cannot provide for themselves all of the ADL’s but do not need constant supervision. Residents are often provided with a customized plan upon entering dependant upon their condition. For example, if a resident once needed help with bathing due to osteoporosis but the condition has gotten better, their plan will be updated to fit there needs.

Financing

Another important aspect to remember about retirement planning is financing. Financial planning will take place long before your worry about housing concerns. The most popular retirement investing occurs through a 401(K) plan. A 401(K) is categorized by the IRS as a defined contribution plan. 401(K) plans have multiple options. No matter what option you choose, the goals of these plans are to apply your current wages or investments into savings until you retire. Many employees choose contribution plans. This means that the employee elects to contribute a certain amount of their wages at their discretion into a 401(K) plan with the income tax being deferred. With deferred tax, the plan can develop interest on its full amount and only be taxed upon withdrawal during retirement.

Another 401(K) plan is an employer matching program. This means that the employer will match a certain percentage or the entire employee contributed amount. These as a whole a called employer sponsored plans. Another employer sponsored plan is participant directed. This means that the employee selects multiple stocks, bonds, and money market investments to invest in. Some companies also allow employees to invest within company stock. The problem with investing in your own company stock is that if the company goes bankrupt, you may lose portions or the majority of your 401(K) plan.

If you are in a competitive job market, it is beneficial to weight 401(K) options by different employers. Unless you are religious about depositing into your savings account, your 401(K) will be the majority of your retirement financing.