With retirement so close, you may find yourself browsing catalogs or websites for cruises or walking tours. But even if you’re convinced you’ve saved enough to retire in a year, you’ve still got plenty of work to do — and big decisions to make.
Start by sitting down with your human resources department to review your pension (if you have one), any retiree health care coverage and other benefits. In some cases, postponing retirement by just a few months could affect your monthly pension payout or your 401(k) match, so be judicious when setting a date for your departure.
This is also a good time to refine your retirement budget. You should have a better idea of how you’ll spend your time and how much those endeavors will cost. And if you’ve decided to downsize or move to a lower-cost area, you should be able to estimate how reducing your cost of living will affect your budget.
Determine when you’ll apply for Social Security. Use your online account to review how much your benefits will contribute to your retirement income. Most boomers are eligible for full retirement benefits at age 66, but if you delay until age 70, you’ll receive a delayed-retirement credit of 8% a year.
Start exploring your Medicare options. If you’re approaching age 65, you’re probably already receiving lots of mail from various Medicare Advantage, medigap and Part D prescription plans. You’ll be in a much better position to choose a plan that’s right for you if you start reviewing your options at least a year in advance, says Kari Vogt, a certified financial planner and Medicare insurance broker in Columbia, Mo. Planning ahead will also help you avoid gaps in coverage that could trigger costly Medicare penalties.
If you’re eligible for a traditional pension, review the pros and cons of taking a lump sum versus a monthly payout. A CFP can help you consider which option works best for you and your spouse.
Decide what to do with money in your current employer’s 401(k) plan. Rolling the money into an IRA may offer more flexibility when you take withdrawals, but some 401(k) plans provide institutional-class funds with lower fees.
Simplify your finances. If you have 401(k) plans with former employers, consider consolidating them into an IRA so you can reduce paperwork, more easily review your investment allocation and possibly lower some of your account expenses.
Go to www.missingmoney.com or www.unclaimed.org to make sure you haven’t lost track of any former employers’ pension benefits, retirement plans, bank accounts or other funds.
If you have decided on a retirement destination, step up your research. Subscribe to the local paper, talk to real estate agents in the area, and research local hospitals and health care providers.
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