First Person: Creating a Retirement Timeline

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Having a timeline can be critical to successful retirement planning. And while we still have a good 30 years until we near retirement age, this doesn't mean my wife and I aren't already developing our retirement timeline.

With that much time ahead of us, it can be hard to see such a timeline clearly and set it all out before us. Therefore, we've asked ourselves certain questions that have helped us determine and account for the events that need to be handled before we arrive at our golden years.

When will debt be paid off?

But there is not only college costs and potential debt to consider but other debt as well. A NYTimes.com article notes, "The Consumer Financial Protection Bureau estimates that 30 percent of all homeowners 70 and older have mortgages to pay off. In 2001, just 8 percent of owners 75 or older carried mortgage debt, according to the Federal Reserve's Survey of Consumer Finances, published in 2010."

Looking to enter retirement without such debt is why we made it a priority to become mortgage free as quickly as possible. To assist us in our efforts, not only did we take on a 15-year mortgage with our previous home, but we put extra payments toward our mortgage so that when we eventually downsized, we were able to take the principal and purchase a smaller, cheaper home outright.

When or will Social Security benefits be an option?

According to the Social Security Administration, current estimates put the year in which the trust fund will only be able to pay about 75 percent of estimated benefits at 2033. That's only 20 years away. This means that it is an important consideration of our retirement timeline. Knowing that without changes, we may only be getting a fraction of our retirement benefits - and possibly even less than is currently estimated - it plays a part in just how and when we plan to retire, in what way, and how much we'll need to do so.

Will there be a health insurance gap?

At this point, the age we can sign up for Medicare is currently 65. However, with almost three decades to go until we reach this point, this age could be pushed higher before we reach get there. And since I'm self-employed, my wife is a type I diabetic, and Obamacare is far from a tested means of affordable individual coverage, we could find ourselves facing an insurance gap that could push us to delay full on retirement until we are Medicare eligible. Therefore, one of us retaining employer-sponsored health care can be critical until we reach Medicare eligibility.

When will the kids be through college?

There is no guarantee our kids will be going to college. However, I'd rather be safe than sorry when it comes to this aspect of our retirement planning. Getting to age 50 only to realize that we're going to have to undertake debt to help the kids through college could be a big setback to our golden-year planning.

And with two children spaced five years apart this means that their college tenure could stretch nearly a decade…maybe longer. According to CollegeData.com, "In its most recent survey of college pricing, the College Board reports that a "moderate" college budget for an in-state public college for the 2012-2013 academic year averaged $22,261. A moderate budget at a private college averaged $43,289."

Having such costs - and any associated debt - paid off with as many years as possible in front of us before retirement could make the transition into our golden years much easier.

With such questions at the forefront, it helps us better lay out our retirement timeline and pinpoint some of those potential hurdles that could waylay us along the road to our golden years.

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Disclaimer:

The author is not a licensed financial professional. The information provided in this article is for informational purposes only and does not constitute advice of any kind. Any action taken by the reader due to the information provided in this article is solely at the reader's discretion.


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