Retirement is something we all work towards, yet all hate to think about. In order to retire at the average retirement age for Pennsylvania residents of 62 and 65 years old, it is crucial to start planning for retirement as early as possible. People as young as 25 years of age can begin a 401K retirement savings plan or IRA to invest in their future, however, it is often much later in life that retirement is thought about. The longer retirement savings are postponed, the longer it will take to build enough money to be able to retire. No matter how much the thought of retirement scares you, it is in your best interest to think about your future today!
Calculating Your Retirement Needs
Determining the amount of money that is needed to retire on can help better grasp the amount needed to be saved each month. The money saved will need to cover all of the years of your retirement, so if you plan to retire at age 65, plan for 20 to 30 years of funds. To retire, you will need approximately 65 to 70% of your current earnings need to be saved to maintain your current standards of living. Many online calculators are available to help you determine the monthly amount that will be needed to be saved. Do not forget to take into consideration mortgage payments, traveling, medications, college loans for children, and other debts that may not be paid off by the time you wish to retire. It is nice to be able to have these debts paid off before retiring if at all possible. Also keep in mind that the cost of living increases every year. In the state of Pennsylvania, a program called PACE or PACENET offers a break for older Americans with their prescriptions, requiring no monthly fees or premiums for those enrolled. This may offer a bit of break for your retirement planning, but remember that this program does not cover over the counter medications or visits to the physician.
Employer Assisted Retirement Plans
One of the best ways to start saving for retirement is by investing in your employer’s pension plans. Talk to your employer to find out if you are eligible as well as what is covered by the plan and what happens to the plan if you switch jobs or are laid off. Once you have invested in a plan, leave it alone! Withdrawing funds from the retirement plan can have penalties and you may lose tax benefits that are available. With IRA(Individual Retirement Accounts), up to $5,000 per year, or more if you are 50 or older, can be put into the account. There are several tax advantages to doing this. Many employer based 401K retirement plans offer company matched deposits which can help your money grow faster. Social security benefits average out to equal 40% of your earned income and can provide a small nest egg for retirement, however, social security benefits should never be depended on when planning on your retirement.
Find a Trusted Financial Consultant
Talking with a Financial Adviser is another smart move. As retirement issues can be complicated, a Financial Adviser is trained to answer all of your retirement questions and provide you with the information needed to retire successfully. Your adviser can help prepare a retirement plan based on your individual circumstances, and lead you in the right direction to be able to retire at the age you want to retire. The Financial Adviser can help you set realistic retirement goals to help you meet the things that you desire to do.
Stick with Your Plan
Once you have made a retirement plan, stick with it. Set both long and short term goals for your retirement needs, and be sure to review your goals once per year at minimum. Life is constantly changing, therefore your retirement needs and goals may also change. Before making any decisions regarding retirement savings, check to ensure that you are making the right decision. Saving for retirement is important, and one wrong move can cause years of setback.
Keep Saving
Even if you have already retired, the need for savings do not stop. Retirement lasts for many years, and during all of these years you will need an income. When the opportunity presents itself, continue to save money as much as you can. Look for simple ways to reduce the amount of money that is being spent, and reduce the debts that you may have if it is possible to do. Pennsylvania is an affordable place to live with many other benefits for retirees.
Reasons to Retire in PA
Pennsylvania is an ideal state to retire in. Kiplinger named the state as one of the top 5 places to retire in, as well as one of the 50 smartest places to live. With distinct beauty and vibrancy, Pennsylvania offers the peace and tranquility sought after by retirees. The Western part of the state, particularly Pittsburgh, is also one of the most affordable choices for those seeking a quality retirement. The city ranked number 2 on a list of the best big city retirement values. Pennsylvania’s housing market is also among the best. The median house in the Pittsburgh area was $62,955.
Popular Cities
When retiring in Pennsylvania, you may be curious to know the best cities to retire in. The entire state is friendly for retirees, but some cities are particularly better than others. As stated above, Pittsburgh is among the best, but many other Pennsylvania cities are also excellent choices. Top small cities to retire in the state:
- Erie
- Kennett Square
- Allentown
- Harrisburg
- Bethlehem
- Allison Park
- Lancaster
- King Of Prussia
These small cities offer plenty of charm to retirees and also offer a list of fantastic things to occupy the time of retirees in the state. Pennsylvania offers retirees a friendly place to call home, where neighbors are still friendly and the fun for the golden years is still well alive. Some of these cities have populations of less than 20,000 people, perfect for those who still enjoy small town life.
Climate
For those choosing to retire in Pennsylvania, climate is yet another top reason to choose the state. Residents are treated to a diverse climate throughout the year. Summer months are warm and beautiful and the winter time offers mild, cool temperatures. Average temperatures for summertime are between 71 and 83 degrees. It is never to humid in the state, which can make the temperatures that much more appealing. July is the state’s hottest month. During the winter temperatures rarely fall below the 34 degree mark, and the average temperature is 39 degrees. Snow is often found in the state, creating the perfect scene for a magical Christmas. Rainfall is also plentiful in the state, with an average of 41 inches for the year in the state. Kids and grand kids will both love visiting the you during the holidays to enjoy some of the beautiful snow fall that will most likely happen in the state. These temperatures make for the perfect weather to get out and enjoy all of the activities you have waited so long to do. And, since the state offers retirees many options for an active lifestyle at a low cost, there is even more reason to do those things you have dreamed to do!
Taxes
Taxes are something that everyone hates, and going into retirement, taxes can be a huge burden. Luckily in the state of Pennsylvania ranked #5 as one of the best retirement havens, and #32 as lowest taxes(with 50 being the lowest.) State sales tax are set at 6%, with food; clothing, text books, heating fuels, prescription and non-prescription drugs exempted from the tax. Personal income taxes carry a flat rate of 3.07%, and retirement income taxes are capped at age 59½. This includes Social Security, civil service, state government, and private pensions are included in this exemption, as well as IRAs. Property taxes are governed by the local government. The property tax cannot exceed 30 mills on the value of the property without special permission that must be granted from the courts. Households with those who are e 65 years of age or older that meet certain income eligibility requirements may qualify for this program. Rebates of paid property tax or rent, up to a maximum of $500 per year, are available. To qualify, annual household eligibility income must not exceed $35,000. The Property Tax program allows residents to exclude 50% of Social Security payments. These figures are amazing for those retiring in the state.
Pennsylvania offers so much more for retirees. Bouncing back to Philadelphia, as it is a top choice for retirees in the state, there is an excellent urban retirement area with plenty to do and plenty of places to live. The city is second only to Florida in the number of retirees who live there.