What is pre-retirement? Somewhere between 1-3 years before you decide to call it quits and head for the tropics, just take-it-easy, or start the next phase of your life. Before putting in your retirement notice, you may want go through this checklist and explore some of the suggested topics.
1. Visit with your Human Resources Department to determine what retiree benefits will be available to you, at what cost, and for how long. If you are turning 65 you will be eligible for Medicare and your employer sponsored plan will end. If you have a spouse that is relying on those benefits you are going to want to consider what it will cost for her/him. Now with the healthcare reform in place, you won’t have to worry about qualifying for health benefits but you do need to consider enrollment periods and cost. It's best to talk with a licensed agent before pulling the plug on your employer offered plan.
2. Roll-over your 401K into a product that will be under your control, not your employers. In uncertain times, you want to make sure your retirement fund is in your control, not the future stability of your employer.
3. If you haven't already looked into long-term care insurance, now would be the time. Most often people wait too long and chronic issues make them un-insurable or the cost is prohibitive. If you don’t think you’ll need it, consider this: 70% of men and 79% of women from the age of 65 and beyond will have a need for long-term care. Health-care is one of the largest expenses we have as we age. Fidelity Investments estimates that a couple would need the equivalent of $225,000 in savings at age 65 to offset future medical expenses, not including long-term care costs. One year of care in a nursing facility presently is $73,000 annually with projection of that cost to be $98,100/yr in 10 years and $131,850/yr in 20 years. Of course your goal is to avoid going into the nursing home, which long-term care insurance will help you finance other options like home care and assisted living. Exchanging a reasonable $2,000-$3,500 a year of premium dollars for a married couple for an increasing insurance benefit that starts immediately at $400,000 is a highly advantageous investment. Where else can you get that kind of return?
4. Personal information. Make sure your company has your current home address and contact information.
5. Be sure beneficiaries are designated on pensions, life insurance plans, annuities, etc. Especially important if you are divorced and remarried.
6. If you haven't already done your estate planning like getting a Will or Trust prepared, now is an excellent time. Also, don't forget about power-of-attorney designations and health care directives. Paying a little more upfront for planning is going to save your family thousands of dollars in probate, not to mention the headache and the time involved. It doesn’t have to cost a lot to prepare. Please inquire about a free estate planning guide and gift certificate to get help you with your planning needs.
7. Be sure to cash out unused vacation or sick leave and place it into a retirement account.
8. If you are eligible for Social Security benefits (available at 62 or older), contact the Social Security Administration three months prior to collecting benefits. Apply online at www.ssa.gov, visit your local office, or call 1-800-772-1213. IMPORTANT: Don't rely on the Social Security office to advise you of when to apply for your benefits. Given the wrong advice and you and/or your spouse could make a costly decision that could result in losing up to 76% of your benefits. Doing a little homework, or attending a seminar can help you decide the best age to start collecting your social security benefits while avoiding costly mistakes. For a list of resources in your area, drop an email to firstname.lastname@example.org
9. If you are going on Medicare (available to 65 yrs and older or due to a disability), contact the Social Security Administration (SSA) at least 3 months before you need benefits to begin. Enroll in Medicare Parts A and B at www.medicare.gov or phone 1-800-772-1213.
10. Contact Life Resources Group, LLC. to help with all these planning needs and more.
Written by Grace Gulden, contributing author and advisor
Life Resources Group, LLC.