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You just have to know whom to ask. "

Countdown to Retirement

Countdown to Retirement

4 to 5 years from retirement.....

This is the point when many people start building the knowledge for a successful retirement.  You should begin pulling all the pieces of information together to support the many decisions you will be making along the way.  This is important to help take the fear and unknown out of the retirement decision.  Start a file, keep it at hand.  Start discussions with your spouse or life partner, find out what each of you expect during retirement.  Prepare a document locator to record the where-abouts and details of the following:  policy numbers and phone numbers for all insurance carriers, account numbers and contact phone number for all investment and savings accounts, location of will, trust or other important information.  Inform your spouse, partner, or beneficiaries where the document locator is kept.

  • Pick one or two tentative retirement dates.  These can be changed later if conditions warrant, but at least this will give you a timeframe from which you can begin the planning process.
  • Meet with a retirement specialist.  A financial blueprint should be drafted early in your relationship and it should incorporate all of your portfolio pieces to provide a snapshot of your income needs during retirement.
  • Check your potential eligibilities for the chosen dates.  Will you be eligible for Medicare, social security, or pension benefits?  Discuss potential gaps in coverage, such as health insurance or savings gaps.  Make a plan for reducing your total debt before retiring.
  • With you family, think through your desired post-retirement lifestyle and income needs.  Are there potential major events or other circumstances that could impact your retirement plans?  Will retirement include relocation, change of housing, or major purchases?
  • If relocating to a different part of the country is a possibility, start to do research on those areas.  Consider the weather, others who will make the move with you, state taxes when it comes to retirement assets, etc.  Also consider making an extended stay in those areas to make sure you really like the area before you commit to the move.
  • With regard to the income you'll receive in retirement, obtain estimates of likely amounts you'll receive for the tentative retirement dates chosen.
  • Several items become timely considerations for many of us at this point in life:
    1. Consider obtaining adequate long-term care insurance if you do not already have coverage in place.
    2. Maximize tax deferred contributions if possible*.
    3. Many people approach retirement without having addressed the execution of legal paperwork*, life insurance, wills, or trusts.  Begin to work on this.
    4. Secure a liability umbrella policy to protect the retirement assets you worked so hard and for so long to accumulate.

3 years from retirement.....

  • Create a retirement budged based on different assumptions.  Start with current expenses and then anticipate how those costs will change once you retire.
  • Work on a game plan to start paying down debt.  Retire any high interest credit card debt before you retire.  Pay your loan back through the 401k or 403b until you retire.  You also might want to retire your mortgage, even if your tax-deductible monthly payment doesn't bust your budget, so long as your loan agreement allows prepayment without penalty.  If your mortgage is paid off, consider increasing your 401k or 403b contribution by the amount of your retired mortgage payment, as long as it doesn't go over the maximum contribution allowed.
  • Track down pensions from current and former employers.  Obtain a copy of the summary plan description detailing how you can elect to receive your benefits.  If you're not sure how to find out about potential pensions, read the online booklet "Finding a Lost Pension", or search www.pensionhelp.org, a service of the Pension Rights Center.

1 year from retirement....

  • Firm up your expected retirement date, review your budget, and update it accordingly.  Also update your financial blueprint.
  • Use up your benefits.  Use your employer sponsored medical insurance while you still have it.  Medicare doesn't cover everything, particularly dental and vision, so get procedures done while you're still covered.
  • Don't forget to take all the vacation and personal days you've accumulated as either time off or cash, if the option is available.
  • Explore post-retirement medical benefits and life insurance options.
  • Insurance and medical coverages' and their costs can, and most likely will, change significantly upon retiring.
  • Investigate whether your company provides benefits for retirees, or whether you can pay a monthly premium to stay on the group policy.  By law you're allowed to remain on your employers medical plan for 18 months after you retire, but you will have to pay the full cost of the coverage.  If there is a gap after the 18 months, and before you become eligible for Medicare, you may have to consider adjusting your retirement date in order to eliminate any gap in medical coverage.

6 months from retirement....

Set the optimal retirement date.  By waiting until the end of the year, or your employment anniversary month, you could add a full year of service for the purpose of calculating your pension.  Plans vary, so you will need to contact the retirement plan administrator for clarification. Discuss your final retirement goals again with your entire family laying out expectations upon retiring.

  • What are your spouses' expectations of you once you are home full time.
  • Talk with your children about their expectations - will you be helping out with the grandchildren.
  • Start to formulate a list of activities or hobbies you would like to do after retirement.

FINAL CHECKLIST:  3 months from retirement....

Visit with the Human Resource department to find out exactly what is needed to retire.  Request all the necessary paperwork and inquire about any deadlines or timelines for filing your forms.  Meet with your retirement specialist to discuss income needs and investment strategies for your retirement assets.  Once any applicable changes have been executed, meet again with the retirement specialist to review the company plan options that you have chosen.  If you opt for the lump sum, arrange to have your employer roll it directly into an IRA to avoid having 20% of it withheld for taxes if the money passes through your hands.  Follow the advice and assistance from your advisor in completing all the necessary paperwork and/or making the appropriate phone calls.  If you will be moving to another state, have an attorney from that state review your will and other legal documents to make sure they continue to be valid.  Other issues that may need to be addressed at this point are:

  • If you are eligible and are going to take social security, it's time to apply, either in person or on-line at:  www.socialsecurity.gov
  • For additional information on understanding your social security retirement benefits click here:  Understanding Social Security Retirement Benefits by BlackRock. 
  • Sign up for classes through your local park district and research getting involved with local clubs.
  • If you haven't printed out the document locator, do so now by clicking here.

 *Tax and legal services offered in conjunction with qualified professionals. Securities America and its advisors do not offer tax or legal services.


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