There is an abundance
of things you need to do prior to retiring. A great place to start is to
organize a checklist to ensure you address all your questions, concerns and
issues.
Here are four points to make sure you include on your list.
HEALTH INSURANCE
If you have employer-sponsored health insurance, you need to
find out if it will carry over into retirement years.
Some employers offer health insurance benefits for their
retired employees, and some even extend the offer to spouses as well. Find out
what coverage options for which you are eligible and be ready to choose the one
that best fits your situation.
If employer-sponsored retiree health insurance is not an
option, then you will need to shop for a Medicare supplement plan. Whether you
have employer coverage or not, you will most likely need to enroll in Medicare
at some point -- either immediately upon retirement, or, at age 65 if you
retire at a younger age.
RETIREMENT PLAN OPTIONS
Investigate your retirement plan options. If you have a
pension, find out the different monthly payout choices, and if a lump sum
payout also is available. Determine whether you should do any pension
enhancement planning, such as choosing the single life option, and purchasing
permanent life insurance to cover your spouse.
If pension enhancement makes sense in your case, you need to
begin the process well in advance of retirement to ensure that you have the
coverage in place before signing any pension documents. If you are under age 59
½, be aware of how to avoid an early withdrawal penalty.
Know what options you will have for your 401(k), 403(b), or
other retirement plan. Find out the process for rolling it over into an IRA,
and when you will be able to do it — typically it is within a few weeks after
your final paycheck.
PRACTICE RETIREMENT SPENDING
Live like you already are retired for at least 12 months
before you actually do retire.
Extra income should go straight into a savings account to
build a cushion for any shortcomings in your plans for spending needs.
Estimating spending needs is usually the most difficult task
for pre-retirees - many people answer this by delineating the sources of income
they will have or listing the expenses that they won’t have any more.
What you actually need to do is take it a step further and
understand everything you will need to spend money on when you’re retired — not
only regular things like taxes and utilities, but also periodic things like
vacations and house or car repairs. It is crucial to incorporate non-regular
expenses into your planning.
DELEGATE THE WORRY
Make sure you have the right advisors to help with all your
planning. You’ll want to consult with an insurance agent who specializes in
Medicare supplements, and a financial advisor who understands pension
enhancement planning and retirement income maximization techniques. Let them
help guide you into retirement as stress-free as possible.
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