Retirement Planning
Successful retirement doesn’t just happen. It is planned out and carefully executed. If you have labored under the delusion that you will simply arrive at retirement readiness just by achieving a certain age – sorry to burst your bubble! But at The Money Coaches we want to help make your successful retirement a reality. Because of this we have put together a list of things you need to check and have completed before you retire!
Retirement Planning Checklist
Determine your full retirement age as determined by social security – www.ssa.gov.- Set up an account with Social Security 6 months prior to your full retirement age and calculate the benefit you will receive.
- Gather information about Medicare and look for a supplemental plan that best suits you. If you are a veteran, make sure you understand your benefits and check to determine if they change at retirement.
- Review your 401k and pension plan options with your company’s representative. After examining your options, talk with a local investment firm. Most financial managers will suggest a rollover because this is the best way to move your retirement accounts to avoid tax problems. You want to avoid taking a lump sum settlement when receiving your 401k and/or pension money.
- Know how you will spend your time! Ask yourself what will get you out of bed? If you have a spouse it would be a good idea to discuss this at length prior to retirement, as it might take a lot of mulling to determine what you both have in mind. Many people think they will do all those things they don’t make time for now, but it is better to have a plan than to hope you figure it out once you’ve retired!
- Find opportunities to volunteer in the community. This keeps you engaging with people and that is a key ingredient to good mental and physical health.
- Check with your local utility companies about having an energy assessment done on your home. Many will do this free of charge and that will allow you to make the necessary repairs that can lower your utility bills.
- Put together and live on a budget. Use tools like www.everydollar.com or www.mint.com or simply use a written out budget. A budget is always important, but when your income is fixed that becomes even truer.
- Do not isolate yourself. Doing so can lead to a whole host of problems like substance abuse, weight gain, depression, and higher spending to entertain yourself. These are very real pitfalls and can often impact retirees because they don’t have social interaction or any plans after they have fished for three weeks and cleaned out the garage.
- Do not retire with debt. Some people may advise you that you should keep a mortgage because you might receive a small tax break. Direct them to www.themoneycoaches.com. This is simply not a good idea for 99.9% of people. Living free of debt in retirement is the best option.
- Do not mess around with reverse mortgages. Those are debts and as we have already covered, not something you want in retirement!
- Do not stop investing, or at least following your current investments. Stay in contact with your investment professional. You may want to deal with someone nearby due to travel difficulties in later years. Find this person now and test them with a small amount like a Roth IRA.
- Review all your insurance policies: home, auto, health, and life, etc. Look at deductible amounts as well as what changes you could make that might lower your cash flow needs. Is your home insured adequately? Have you investigated long-term care insurance?
- Be aware that inflation in the U.S. has been around 3% for many years and plan accordingly with regard to what you will need for your spending in retirement.
- Look into long-term care insurance. You may want to look at several facilities before you or a spouse needs one. Look carefully at the costs, so you can make a good decision about you financial needs.
- Consult a tax professional so you understand how your taxes will impact your retirement income. During the early years expenses may be near the pre-retirement levels. Over time, expenses drop some as retirement routine kicks in. At some point health care costs drive the expenses back up.
- Do a dry run. While you’re still working, live on the amount that you and the tax professional have estimated that you will have available each month. This probably will help you save more and spend less.
- Plan and discuss with your spouse the two eras in retirement. The one when both are living and when either one is the survivor. Simply stated as the body ages we need more help from the medical professionals, and that all costs money.