Penobscot County Administrator Bill Collins speaks about his upcoming retirement after 20 years on the job while sitting in his office at the historic Penobscot County Courthouse in Bangor on Nov. 20. Credit: Natalie Williams / BDN

This first appeared in the June/July issue of Bangor Metro.

What will your retirement look like financially? That’s a good question to ask.

Knowing ahead of time how much money you will have to fund your retirement years plays a big part in planning your retirement. It can also give you some time to adjust your current financial situation if needed.  

Start by getting an up-to-date handle on your retirement financial picture. Gather balance information on employee-funded retirement accounts or pensions as well as Individual Retirement Accounts and other savings. Do you have property to sell when you retire, such as downsizing from your family home? That’s something to consider.

You’ll also want to monitor your anticipated Social Security benefits.

“To qualify for social security benefits, you earn credits throughout your work history,” said Zach Means, CEO of Means Wealth Management, a financial advising firm in Bangor. “Which is why it is important to periodically review your statement to ensure the earnings record is accurate.”

Keep any relevant account information — where they are located, account numbers and passwords — in a safe and accessible location. This will make it easier for you to check on them as you get closer to retirement to see how they are doing.

If you sign up for online services, including the Social Security Administration’s portal, you can take advantage of digital tools that help you estimate your funds at the age you are thinking of retiring. The amount of Social Security benefits, for instance, that you receive will increase with the age you retire. But some people prefer to retire sooner.

“We generally give the advice to wait on claiming Social Security if you can afford to,” Means said. “It’s important to consult with a qualified financial advisor before making the decision to claim or defer benefits.”

There can be tax implications when it comes to your retirement income and talking to a financial planner or accountant now can help avoid some unpleasant surprises later. Social Security and retirement income like traditional 401(k)s or IRA, for example, may be subject to income tax once you start receiving them.

The federal and state regulations covering what retirement income can and can’t be taxed are pretty complicated, Means said. He recommends not waiting until retirement to talk to a financial advisor or accountant to create a strategy for your retirement income most advantageous to you in terms of taxes.

Once you have a general idea of what your financial situation will look like after retirement, it’s a good idea to start thinking about a budget for those years. Ideally that budget should allow you to maintain your current lifestyle once you are no longer working. Means stressed the importance of living within that budget so you don’t exhaust your retirement funds or go deeply into debt to fund your retirement.

One of the things that can eat into the best planned retirement budget out there are costs associated with long term health care. Gambling you are not going to need some sort of medical assistance or residential care in your later years is a risk when it comes to your finances, according to Means.

It’s estimated that almost 50 percent of people will need long term care at some point in their life, Means said. In Maine, the cost of a private room at a nursing home is around $350 a day. That works out to $127,000 a year.

Medicare covers up to 100 days of skilled nursing care per illness, but there are a number of requirements that must be met before the nursing home stay will be covered. Medicaid — known as Mainecare in Maine — on the other hand, does cover long term care in a nursing facility. Your eligibility for Medicaid benefits is tied to your level of income.

To supplement Medicare and Medicaid benefits, you may want to think about purchasing long term care insurance. This kind of insurance generally covers the expenses of care not covered by Medicare or Medicaid. Long term care insurance policies are available from a number of insurance providers and it’s a good idea to shop around getting quotes for the best premiums and policies for you.

“There is no golden rule for long-term care savings,” Means said. “Long term care planning is part of an overall financial plan and should be considered earlier in life, not later.”

It all really comes down to planning, Means said.

“For those that do have a financial plan, we start to see them fall into trouble when they start making financial decisions outside of that plan,” Means said. “Someone may be spending too much too fast and draining their savings, or they may be too conservative and may be missing out on the opportunity to take more vacations or buy that dream property.”

Everyone, Means said, wants to feel secure and confident they can afford to retire. And that is why it’s important to know ahead of time what your financial future will look like and make any adjustments now to secure it.

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Julia Bayly

Julia Bayly is a reporter at the Bangor Daily News with a regular bi-weekly column. Julia has been a freelance travel writer/photographer since 2000.