Many people define themselves by what they do, building their identity from–and finding meaning in–their occupation of choice. Besides the adjustment in income and how one’s time is spent, entering retirement represents a major lifestyle change; one requiring the retiree to ensure adequate resources to allow them to find new meaning and identity in their forthcoming, long vacation.
Besides your preferred retirement plan’s benefits, a comprehensive financial plan should also review and consider your healthcare and estate options. So what are some milestones to meet before you enter your golden age, and what are some smart steps to take when you finally arrive there?
What to Do Before You Retire
- Get Organized — Take control of your finances by getting organized and laying out a clear financial plan to help you reach your retirement goals.
- Consider When to File for Social Security — Full benefits for most retirees begin at age 66. An application for Social Security usually requires a couple of weeks to process. Take this into consideration when filing. Go to www.ssa.gov for detailed information.
- Finalize Your Withdrawal Strategy — Where will money come from during retirement? How much will you need? You want to have the answers to these types of questions before you retire.
- Finalize Health Insurance Coverage — Do you need transitional or supplemental coverage in addition to Medicare? Pinpoint a plan that best fits your needs. Go to www.medicare.gov for detailed information.
- Determine Your Life Insurance and Long-Term Care Insurance Strategy — You may or may not still have a need for life insurance once you’re retired. Also you should learn the facts about long-term care insurance and decide if and when it is appropriate for you.
What to Do When You Retire
- Review Your Finances — Review your assets, budget and cash flow each year so that you can correct and adjust as needed. This includes potentially reallocating investment assets, reviewing investment performance, adjusting withdrawal rates, and anything else necessary to make sure your money lives as long as you do.
- Know What Your 401(k) is Costing You — Until recently, many people probably didn’t know that they paid fees to participate in their 401(k) plan. It’s important to understand the fees associated with your account in order to make informed decisions about your retirement investments. For more information on plan fees, check out our previous article.
- Don’t Forget Required Minimum Distributions — Traditional IRAs and 401(k) plans require minimum distributions (RMDs) beginning at age 70 ½. Check with your accountant or financial advisor as the rules may change and exact details may vary depending on your situation.
- Update Your Estate Plan Periodically — Check with your attorney to make sure your estate plan includes such items as powers of attorney, gifting, account titling, or others as necessary, and that all beneficiary designations are accurate and current.
- Finally, go out and enjoy yourself! You’ve earned it!