Things To Consider When Retiring


Options If Youre Under Age :

Things to Consider Before Retirement
  • Retiree medical coverage through your employer.
  • The insurance policy of a spouse/partner .
  • Coverage through COBRA to continue health insurance for up to 18 months after losing your coverage through work. COBRA can be pricey because you pay the full premium . If you have dental and/or vision insurance through your old job, thats included as part of COBRA, too.However, if you turn 65 during those 18 months, you must apply for Medicare.
  • A Health Insurance Marketplace plan. Availability varies from state-to-state and depends on your household income. Visithealthcare.govto learn more.

Lifestyle Considerations How Will You Live

Most of us would ideally like to, at the very least, maintain our current standard of living, while others may have grand plans for a change in lifestyle and everyday hobbies.

Youll need to consider where you stand on certain lifestyle questions such as: where will you live? Will you downsize or move to another city? Selling your home to downsize will free up some money for you, but there may be social security implications if you hope to receive the Age Pension.

Thinking about your home, will you need to carry out repairs or renovations? Are there any other big-ticket items planned for the future ?

Do you have money in savings? Will you be eligible for any government entitlements?

What Funds Should You Buy

There are a variety of funds types to consider when saving for retirement. Here are the most popular options.

Actively managed mutual funds

These funds have been around for decades and are still the most-popular kind of security among retail investors. They hold a variety of stocks or bonds, and sometimes both, in one investment vehicle. Mutual funds are ideal for people who don’t want to choose their own stocks. Instead, a professional fund manager can do it for you. If you want to own a bunch of international stocks, but don’t want to pick individual companies, then buy an international stock fund. The same goes for tech stocks, U.S. stocks and corporate bonds there’s a fund for everything. The main drawbacks are fees and flexibility. Because someone else is doing the stock picking, fees are higher on actively managed mutual funds than on other kinds of investment vehicles. You also can’t buy or sell them during the day as they’re only priced after the market closes.

Index funds

Exchange-traded funds

Target date funds

Build your portfolio

A lot of people like investing on their own, but when it comes to retirement savings it’s a good idea to work with a financial advisor who has a certified financial planning designation. Here are a few things to look for in a good advisor.

Think about fees

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How Long Will Your Money Last

Another big question regarding your retirement is: how long will your super last?

The fact is, were healthier and living longer than ever before, and theres the real risk we will outlive our retirement savings. In fact, according to research recently published by the World Economic Forum, Australians will outlive their super by around 11 years, so savings longevity is a real issue.A handy resource is our Pension Drawdown calculator, which can give you an idea of how long your super could last.

Would Switching To Part

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The answers to many of the above questions may lead you to consider a compromise: working part-time before retiring all the way. You can continue to bring in money if youre not quite at the point financially you need to be, wont have full days to fill, and can retain some of the satisfaction you get from work now .

Its not an option for everyone and wont be available to every potential retiree, but it may be one worth looking into if youre tired of the 9-to-5, but not sure youre ready to take the full plunge into retirement.

Once you get through the full list of questions, you should have a pretty good idea of whether early retirement is for you. If you can manage it, enjoy your newfound free time. If youre not quite there yet, dont despair. Retirement will come and you can rest assured youll have an easier time enjoying it with the extra money you make in the interim years.

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Will You Have Enough Money To Retire

Its one of the most frequently asked questions: how much do I need for retirement?

Theres no hard and fast answer because we all have different financial circumstances and different expectations regarding the standard of living wed like to maintain in retirement.

As a guide, ASFA estimates that the lump sum required at retirement to support a comfortable lifestyle is about $640,000 for a couple and $545,000 for a single person .

Remember that we all have different ideas how wed like to live in retirement, so you may need more or less than this amount. However, its a good starting point to help you work out how much youll need.

To help you work out how much youll have, use our Retirement Income calculator.

What Are My Options With My Thrift Savings Plan

Upon retirement, your TSP may well be your biggest asset. After all, you may have been contributing to your account for 30 years and accruing interest on a tax-free basis. Deciding what to do with your TSP may be your most important decision at retirement so you want to know your options and speak with a professional to learn more. Lets look at the four basic options you have:

  • Lump-Sum Payment: it can be tempting to simply take your entire balance in one payment when you retire, but this can be a very costly mistake. If you are pulling this money from the Traditional TSP, the entire amount will be added to your taxable income for that year and you could be facing an enormous tax debt. Some people want to pay off their mortgage using a lump sum payment from their TSP, but the math rarely works in your favor.
  • Monthly Payments: many retirees are looking for a monthly amount to supplement their pension and social security and will consider monthly installments from TSP. But this comes with considerable risks as well as there are no guarantees the money will last the rest of your life.
  • Purchase an Annuity from TSP: When you choose this option, you are exchanging your account balance for guaranteed payments. The most common type is a straight-life annuity which means level monthly payments for the rest of your life. Sounds great at first, but there are two major downsides: the payment never increases, and there is nothing to leave to your beneficiary.
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    Set Your Retirement Budget

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    Determining a retirement budget before you retire is crucial to ensuring you dont overspend your limited income. Create a spreadsheet with all of your anticipated retirement living costs, including everything from groceries and housing to healthcare and taxes. Define which of these expenses are fixed and which are flexible . Knowing this information helps ensure you have your income set up so that youre receiving enough money each month to cover your expenses but not taking more income than you need.

    Thinking About Retiring Early Things To Consider Before You Do

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    investing-my-money | Read Time: 3 minutes

    For many Americans the thought of early retirement can be very appealing. For those that enjoy their career, having the flexibility to spend more time with family, travel, play golf or enjoy other activities during normal work hours can lead workers to contemplate early retirement.If youre confident that you have the resources to live your desired lifestyle and are considering taking the next steps, here are a few points to consider as you make your early retirement plans.

  • Do I have enough savings: This is the first question many people ask when contemplating early retirement. Not only do you need to plan until some other form of retirement income begins, but for the rest of your life. There are many factors that go into this planning, including income needs, projected investment growth, inflation, healthcare costs, and longevity.

    This is where the expertise of a financial planner can be invaluable in compiling your data and providing advice on the feasibility of your retirement plan.

  • Rising Costs: To explain this in the simplest terms, a bag of apples that you buy today will likely cost more in 10 or 20 years. Although we havent been experiencing the inflation rates of the 1970s, even 2% inflation erodes buying power over time. Its important to include proper assumptions for inflation in your retirement spending plan.
  • About the Author Ted Quillen, CFP®, AIF®

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    Paying For Health Care

    Medicare coverage doesn’t start until age 65. If you want to retire at age 55, you’ll need a source of health insurance that will provide for you until you reach age 65.

    The Affordable Care Act guarantees access to health insurance, even with pre-existing conditions. You can’t be charged a higher rate for any health issues, but premiums are based on age. If you’re between the ages of 55 and 65, it can cost as much as $1,000 per month.

    If you’ve had a healthcare plan and have been able to keep it, you might be able to keep your monthly payments down.

    Some employers may allow you to keep your health insurance with them, but they might ask you to pay some or all of the premiums they have been paying.

    The Kaiser Family Foundation has a calculator to view average healthcare premiums in your state. Depending on your income, you may be able to apply for subsidies. A single 55-year-old with an annual income of $60,000 can purchase a Silver plan through the Marketplace for $360 per month.

    How To Maintain Vigilance Over Retirement Accounts

    When it comes to retirement savings, it is always good to overestimate how much you will be needing during retirement. Most of the time, people forget or they just cant find time to be on track to save enough before retirement. Thats life, Frank Sinatra said melodiously.

    So, it is recommended that you have a word or two with an investment adviser once in a while to keep a close check on your online account or keep a watch on your retirement account.

    And, most importantly, use a service such as MoneyPatrol to closely track all your investment accounts and keep monitoring your portfolio very often to ensure that you are on track to achieve your retirement money goals.

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    Check That Where Your Pensions Are Invested Is Right For You

    Some or all of your money is likely to be invested in funds if you have a:

    • personal
    • stakeholder, or
    • workplace defined contribution pension.

    Its a good idea to check that where your pensions are invested best meets your needs as you move near retirement. For example, if youre planning to use some or all your pension to get a guaranteed income it usually makes sense for your money to move gradually to lower-risk investments.

    Are you planning to use some of all your pension to get a flexible retirement income? Then it makes sense to keep your money in more balanced investments. This is because although lower-risk investments can help protect how much money you have, if you dont get much investment growth, your money might not last as long.

    Some pension funds will change the way your money is invested automatically, but not all do.

    You can speak to your pension provider to find out how your money is currently invested and what your options are.

    But it might be a good idea to get financial advice about the best option for you.

    For help finding one, search our directory on our page Find a retirement adviser

    Pay Attention: Understand The Rules Follow Changes Stay Tuned

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    Yes, I just told you to cut through the noise. However, you still need to pay attention. Again, doing your own research is essential, as is finding resources you can trust. Like I mentioned earlier, the SECURE Act is a great example of why its important to stay tuned-in. Listen to our episode of Americas Wealth Management Show Presidential Elections & the SECURE Act to learn more about the SECURE Act. We will also be putting more information out about it in the coming weeks, so check back.

    Our team stays on top of trends in the market, government, and technology to make sure we dont miss a beat when it comes to planning peoples retirement. As Ive previously mentioned, we have our radio show Americas Wealth Management Show, our podcast The Guided Retirement Show, the Education Center, educational workshops and webinars, Monthly Economic Updates with Dean Barber on our YouTube channel, and much more. Our financial planners are also available to talk with you on the phone, in person, or via virtual meeting to address any questions you have with no-obligation. Just fill out the form at the bottom or give us a call at 393-1000.

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    What Are Some Of The Very First Things You Should Do When You Retire

    The important thing to remember is that its common for people, within the first few days and weeks of retirement, to feel lost. When youve been working for decades and then suddenly stop that routine, its jarring. But the great thing about retirement is you can finally do all those things youve wanted to do that you didnt have time for previously. Here are some of our ideas for what to do when you are first retired:

    Can I Afford To Retire

    This may be the last question on our list, but it is the most crucial one to answer. Before finalizing your retirement, you need to know exactly what your income will be and if it will be enough to cover your needs. You will want to calculate your pension, social security benefit, and any TSP withdrawals then subtract your expenses. It is recommended to complete a retirement budget so you will have a better understanding of your expenses in retirement.

    Regarding Social Security, if you retire before the age of 62, you may be eligible for a supplement based on your Social Security benefit. If retiring after 62, you may either start Social Security benefits early , wait until your Full Retirement Age or defer taking your benefits until age 70. Refer to our Social Security Estimator to view your income options.

    Knowing when to retire from federal service is one of the most important decisions of your life, and many elections are irrevocable after separating from service. So dont go it alone fill out the form below to schedule a consultation!

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    Properly Claim Your Social Security

    This is a crucial part of a properly constructed retirement plan. Yes, there are wrong and right ways to claim your Social Security. And according to a recent study, nearly 96% of Americans are claiming their Social Security at a sub-optimal time, collectively leaving $3.4 trillion on the table. Thats $111,000 per household of lost retirement income due to claiming at the wrong time. Crazy.

    There have been some changes to Social Security in 2020 that you might want to catch up on, but if you have any questions on the subject, you can always get our Social Security Decisions Guide to get you started. Or, like I previously mentioned, weve extensively covered Social Security on this blog, visit our Social Security Education Center for more.

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    Plan For Your Retirement

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    Good planning can increase your financial security in retirement.

    Once youve worked out how you want to live, consider setting up a suitable financial strategy. Ideally, your strategy should provide things like:

    • regular income to meet your regular expenses
    • access to long-term capital growth
    • a cash reserve to cover emergencies
    • a balance between risk and return.

    Your financial strategy in retirement is unique to you because it will help you reach your goals.

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    You May Have A Long Long Life Ahead Of You

    A woman who retires at 55 will have to make her savings last for 28.6 years, on average, compared to 20.4 years if she retires at 65. A man who retires at 55 will have to stretch his savings for 25.1 years, rather than 17.8. And for couples who make it to 65, there’s a 25 percent change that the surviving spouse lives to 98, according to the Society of Actuaries.

    “With improved health care, many people are living longer than the national averages, says Angela Dorsey, a certified financial planner in Torrance, California.

    Join today and get instant access to discounts, programs, services, and the information you need to benefit every area of your life.

    Evaluate Your Health Before Retirement

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    Before you leave your current job, take advantage of your employee healthcare plan. Make sure youre up-to-date on annual checkups, prescriptions, hearing aids, dental care, and vision. Once youre retired, see your doctor annually . Maintaining your physical health in retirement is crucial to a good quality of life and can help keep healthcare costs down, so be sure to ask your physician for recommendations on post-retirement health, fitness, and nutrition.

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