How Financial Literacy Changes Once You’re Retired
How Financial Literacy Changes Once You’re Retired
Apr 28, 2023 By John Csiszar
Financial literacy covers a wide range of topics, from budgeting and saving to investing and planning for retirement. Once you retire, however, financial literacy broadens to include scenarios that may not have been as relevant during your working life. For example, income typically drops in retirement, while expenses may remain the same or even rise, depending on the type of lifestyle you lead and the condition of your general health.
Financial Literacy Month is a great time for both seniors and those about to retire to review their planning and make sure they’re prepared for the changes encountered in retirement. Here are seven topics that are important to understand if you want to avoid any financial landmines in retirement.
Social Security
From the time you start receiving your first paychecks, you’ve been paying into the Social Security system. But as you approach retirement, it’s time to start planning your Social Security withdrawal strategy instead. Before you hit retirement, it pays to maximize your income in any way possible, as your Social Security payout is based in large part on how much you earn during your working career.
You’ll also want to sit with a tax or financial advisor and determine whether you should initiate your payments early, at full retirement age or as late as age 70.
Medicare
Medicare is a health insurance program for seniors, but it’s a complicated system with various parts. To use it effectively, you’ll have to become literate on how it works. In a nutshell, Medicare consists of two original parts, A and B, which cover hospital and medical expenses, respectively. Part B requires a monthly premium. You can also add Part D if you require prescription drug coverage.
Medicare Advantage, also known as Medicare Part C, is an alternative to Original Medicare that is run by a private company. As the choices can get complicated, you’ll likely need to speak to an expert to get financially literate when it comes to Medicare. Note that neither Original Medicare nor Medicare Advantage are likely to cover care outside of the United States.
Required Minimum Distributions
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