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Two Details To Consider When Planning For Your Retirement

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Whether you are just entering the working world or you are at the end of your career, it is never too early to start planning for your retirement. Successful retirement planning requires you to pay attention to a multitude of details to ensure that your saving strategies are a good fit for your situation. Here are a couple items you need to examine during your retirement planning.

1. Your Health (Present and Future)

When planning for retirement, your personal health will influence your decisions. If you are, overall, a healthy individual, you may plan to work longer. More working years means that you have a longer period to stash funds for your retirement. You may decide to invest in riskier funds thanks to your long investment horizon. 

In situations where your health is poor or uncertain, you might decide to focus on saving over other financial goals (such as debt reduction). Or, you may prefer to stick with more stable investments if you have to unexpectedly leave the workforce. 

Unfortunately, it is difficult to accurately predict your future health concerns and understand fully how they will influence your career decisions or account balances. One step that some individuals take to hedge against future health concerns is to purchase long-term care insurance.

Long-term care insurance will cover the costs of paying for long-term medical care (such as a stay in a nursing home or in-home care) so that you don't have to deplete your savings. Premiums for long-term care insurance can be pricey, so you will have to evaluate the potential benefits of having the policy versus the costs. If you have a chronic condition that increases your chances of needing long-term care, take this into consideration.

2. The Structuring of Your Future Expenses

You know that you need to save enough to generate enough investment income to cover your expenses once you retire. However, you also want to make sure that you have access to cash when you incur the expenses. Your expenses might vary over the course of your retirement. Even though you may technically have the funds to pay for the expenses, there may be consequences to accessing some accounts before a certain age or taking a larger-than-recommended distribution.

Utilizing different types of accounts can help you make sure you have easy access to your money when you need it. For example, if you know that you want to complete home renovations and travel extensively at the beginning of your retirement, you may want to divert money for these costs into an account with minimal withdrawal restrictions, such as a Roth IRA or taxable investment account. 

Contact local financial planners for more information on saving for retirement.