Nearing Retirement

Kathy contributes to her IRAs and company savings plan. However, she is aware that the cost of retirement is often higher than anticipated. Kathy is concerned that rapid increases in healthcare costs could consume a majority of her savings.

Here's a possible solution — Kathy can set aside a portion of her retirement savings now to generate a guaranteed income stream later with a deferred fixed annuity. For example, if Kathy took $30,000 and contributed it toa deferred fixed annuity, she can defer receiving income payments until she is ready. Kathy’s income will last even if she lives to 85, 90, 100—or older.

With the rising costs of living, and the ups and downs of the stock market, you may want a steady stream of retirement income. A deferred annuity is a type of accumulation vehicle that allows you to save for later in life. With a deferred annuity, you have the option to convert your annuity account balance to an income stream which can last the rest of your life. Deferred annuities allow your money to grow tax-deferred.*

Deferred annuities can be fixed or variable—a deferred fixed annuity gives you a steady, fixed return on your money, while a deferred variable annuity gives you investment flexibility and potential growth related to the market performance of the selected funding options.

A fixed annuity will provide a fixed stream of payments. A variable annuity will typically provide either a variable income payment based on the market performance of the underlying funding options, a fixed stream of payments through optional riders available at an additional cost, or a combination of the two.

You may have more questions before you decide which one might be right for you. Learn more about Deferred Annuities.

If you're still working, now may be the ideal time to maximize your contributions to your 401(k) or 403(b) plan, especially if your employer offers a company match. In addition to the standard contribution limits, a catch-up allows plan participants who reach age 50 before the end of the calendar year to make an additional contribution on a pre-tax basis. The maximum catch-up contribution for a 401(k) or 403(b) plan is $5,000 for 2008 and $5,500 for 2009.

Did you know that the age you choose to retire impacts the amount of money you will receive each month from Social Security? If you start your Social Security benefits at age 62, the benefit amount you receive is reduced from the monthly benefit you would receive at your full retirement age and will continue at the lower amount even after you turn 65 because of the longer period over which you will be receiving payments.

Full retirement age has been 65 for many years. However, beginning with people born in 1938 or later, that age will gradually increase until it reaches 67 for people born after 1959. The formula is designed so that if you have average earnings throughout your working life and retire at the full retirement age, the benefit you receive in your first year of retirement will equal approximately 42% of what you earned in the year just before you retired. No matter what your earnings, the maximum benefit you can receive at retirement is determined by the Social Security law and changes from year to year.

If you decide to retire after full retirement age, you can increase your benefit in two ways:

• Each added year of work adds another year of earnings to your Social Security record. Higher lifetime earnings may result in higher benefits.
• If you delay retirement, percentage increases will be added automatically from the time you reach normal retirement age until you reach age 70.

If you decide to delay retirement, be sure you sign up for Medicare at age 65. In some circumstances, medical insurance costs more if you delay applying for it.

Most people underestimate retirement healthcare costs. The reality is that unexpected healthcare and nursing home expenses can be significant—and could quickly deplete your assets.

It’s hard to imagine right now, but one day you may require assistance with daily personal care. The cost of long-term care is substantial, and medical insurance and Medicare do not cover most long-term care services.

To estimate your needs, create a healthcare budget starting with your current out-of-pocket healthcare expenses, such as:

• Co-pays
• Deductibles
• Prescription medication

Then compare the difference based on the type of coverage you will have if you plan on retiring before you’re eligible for Medicare (it’s recommended that you apply for Medicare three months before your 65th birthday). Also, examine your family's health history as it may be an indicator of future medical needs and possible life expectancy.

MetLife can help you identify any shortfalls in coverage that can lead to potentially significant out-of-pocket expenses, so you will be better prepared for and protected from the unexpected.

Use our Long-Term Care Calculator to help determine potential costs.

MetLife's life insurance products offer guarantees* that can help you protect your savings and maximize your future income.

Having a life insurance policy in place can help provide guaranteed* income for your loved ones and lessen their financial burden when you’re no longer here. The benefits can help with everything from mortgage payments to college tuition.

Learn more about Life Insurance.