Retirees: Are you ready for retirement in 2022?
Travel vacations, running a marathon, writing a novel, spending more time with friends and family, or even more days on the golf course — the possibilities in retirement are almost endless. Now before you get lost daydreaming about your life in retirement, let’s spend today’s Coffee & Cash reviewing the checklist you’ll need to complete before taking the leap. Our main work with pre-retirees’ centers around helping them to develop a plan to bring together all the various aspects of their financial life into one coherent strategy. While overwhelming at first, developing a solid plan can dramatically reduce anxiety and stress leading up to retirement.
Let’s jump right in!
First you’ll need to decide when to start Social Security
You're eligible to claim Social Security payments beginning at age 62. However, you will receive a reduced payment unless you begin collecting benefits at your full retirement age, which varies depending on when you were born. For example, the full retirement age is 66 and 10 months for people born in 1959.
You can increase your monthly payments if you sign up for Social Security after your full retirement age. Each year you wait, your monthly benefit grows by about 8% up to age 70.
Second, enroll in Medicare or other health insurance
Medicare coverage begins at age 65, regardless of your Social Security full retirement age. When you enroll in the program, you will need to make decisions about Medicare supplement plans and prescription drug coverage or Medicare Advantage plans.
If you retire before age 65, you have to figure out how to get medical insurance that isn't connected to your job. Some people qualify for health insurance through an old employer, professional organization or a working spouse's health insurance plan. You can also obtain coverage through your state's health insurance marketplace until you qualify for Medicare.
Third, check your retirement benefits
Confirm eligibility for a pension or other retirement benefits you earned at work. Also, check to see if you qualify for benefits from a previous employer.
Find out if you're eligible for retiree employer-subsidized health insurance. Check to see if retirees can take advantage of any other company-sponsored benefits, from life insurance to membership in a health club to employee discounts on company products.
Next, take advantage of last-minute benefits at work
If you have dental and vision coverage at work, you may want to visit the dentist and pick up a new pair of glasses before you retire. If the company matches any charitable giving, make your annual contributions before you retire. If your child has an employer-sponsored college scholarship, see if the scholarship will continue after you leave. This is your last chance to use the benefits the company offers.
Number 5: Consider rolling over your 401(k) to an IRA
Employers typically allow you to keep your 401(k) account with the company after you retire. However, you might be better off transferring the money to an IRA or Roth IRA. IRAs typically have more investment options, and you can shop around for lower-cost or better-performing funds.
If you own company stock, either inside or outside a retirement plan, now may be the time to sell some to diversify your holdings. You may also want to tweak your investment strategy and make a plan to minimize taxes as you draw down your retirement assets.
Lastly, review your financial plan
Review your budget detailing your expected income from Social Security, pensions, retirement savings, other investments and part-time work. We suggest that you put together some projections of your retirement income well before pulling the retirement trigger. This helps you to visualize where your income will come from, helps determine whether your expenses are too high, You should have an idea of what your expenditures are going to be, at least for the next few years. Don't forget to include an emergency fund in case of unexpected bills like a medical emergency or major home repair.
If you feel overwhelmed by this step, it may be a good idea to check in with a fiduciary financial planner who can help you develop a plan to invest your nest egg appropriately, prepare for the impact of inflation, balance your budget, and more.
Checking these few items off your check list could really help you get prepared for your golden years and relieve the stress and anxiety of your remaining time in the workforce.
If your retirement is here or around the corner, please feel free to give us a call for a free consultation and a second opinion on how you are shaping up for this important decision. You can reach us at (518) 406-5624 or book a free consultation through the link on our website at www.simmonscapitalgroup.com.
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