Planning for the Future

Posted on Monday, June 18, 2018

When your retirement date is only a couple of years away, take steps to ensure that all financial arrangements are in place. Some questions to answer include:

How much will you spend annually during retirement? You probably looked at these numbers when planning for retirement, but take another look based on your current retirement plans. Don't wait until after you retire, when your options are more limited. Based on this analysis, you may decide to postpone retirement or actively look for ways to reduce your expenses.

What is the total value of your retirement investment portfolio? You may be saving through a variety of retirement vehicles, such as a 401(k) plan, individual retirement accounts (IRAs), annuities, and personal investments. Analyze the entire portfolio, estimating how much income can be expected after retirement. After retirement, you may need to make changes, including reallocating some investments, deciding how to invest a lump-sum distribution, or making arrangements for monthly income distributions.

Have you checked with your employer about your retirement plan benefits? Pension benefit choices are usually irrevocable, so evaluate your options carefully, especially when choosing between an annuity and a lump-sum distribution. Ask your employer to calculate benefits based on different retirement dates. You may find that delaying retirement by a few months can increase your benefits.

Do you know how much to expect in Social Security benefits? The Social Security Administration now sends Social Security Statements to all workers aged 25 and older approximately three months before their birthdays. The statement estimates your Social Security benefits at age 62, full retirement age, and age 70. Review these estimates as well as other pertinent factors to decide when to start benefits. Apply for benefits at least three months before you want to receive them.

Will you hold down a part-time job after retirement? Working on a limited basis can help significantly in funding a long retirement. However, be aware that earnings that exceed certain amounts can reduce your Social Security benefits if you are under age 65. In addition, once certain income levels are exceeded, a portion of your Social Security benefits is subject to federal income taxes.

How will you provide for health insurance? Find out if your employer provides any health insurance benefits after retirement and how much you must pay for those benefits. If you retire before age 65, you may have to purchase health insurance yourself until you qualify for Medicare. Even with Medicare, you'll probably want to investigate Medigap insurance so you aren't left unprotected in key areas.

Have you reviewed other financial areas, including insurance and your estate plan? Make sure you have sufficient life insurance and look into long-term-care insurance. Review your estate plan to make sure it still reflects your wishes for the disposition of your assets.

Retirement is a major change in your life. It is usually a good idea to review all financial areas and make any necessary adjustments

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Disclaimer: The information contained in Dulin, Ward & DeWald’s blog is provided for general educational purposes only and should not be construed as financial or legal advice on any subject matter. Before taking any action based on this information, we strongly encourage you to consult competent legal, accounting or other professional advice about your specific situation. Questions on blog posts may be submitted to your DWD representative.