Getting control of your retirement makes you feel comfortable and assured. Here's a retirement guide of questions to get you into the swing of things. Searching out constructive answers will put you in control.
Items in this retirement guide are grouped according to 6 basic retirement planning areas:
- Your company retirement plans (401k,403b,Pension, etc)
- Retirement income (your personal investments)
- Long-term care
- Your wishes at incapacity and death (estate planning)
- Gifting and legacy plans (estate planning)
Refer to the table for the specific questions under each area of this retirement guide. Your answers should address the items of consideration also listed for each area.
Understanding what income you'll receive under a defined benefit plan (a traditional pension plan) is the first component to constructing your retirement income. If you have an option to take a lump sum instead, you may use it to find a better paying annuity. But the decision to take the lump sum or annuity is a topic to review with your retirement planner or accountant.
Next of consideration in this retirement guide is to obtain your benefit statement from the Social Security Administration. If you've made an estimate of you retirement expense, then you have a handle on what income you'll need. That estimate less your pension and Social Security incomes determines how much you'll need to withdraw from your investments annually.
You then need to allocate your investment portfolio to generate that withdrawal income. If this withdrawal income will deplete your investments before you die, then you'll need to adjust the withdrawal to a "non-depleting" level. Again, your retirement planner or accountant can assist with calculations. This will force you to adjust your living expenses downward accordingly if your income is not sufficient. A good retirement guide for withdrawals is 4% annually of your portfolio.
Be sure to sign-up for Medicare just before you turn 65 and decide on what supplemental healthcare insurance plans are best for you. You want to speak to a retirement planner knowledgeable in senior healthcare options. The two basic choices are joining an HMO (often at no monthly cost to you) or obtaining a Medigap policy (about $100 per month) which allows you to see any physician. There is a good retirement guide on this choice offered free by the federal Centers for Medicare & Medicaid Services.
If you haven't yet looked into how you'll handle long term care (LTC), you should do it now. Here also you can get a free retirement guide to get educated and understand the options. It's available from any agent or insurance company that offers long term care insurance.
Next, arrange for how you and your affairs should be handled if you become incapacitated - even temporarily. You can arrange for this contingency with a durable power of attorney and a healthcare power of attorney, two documents that you can get at the stationery store.
Lastly arrange for how best to leave your assets to your choice of beneficiaries. There are many good retirement guides on this topic and the main issue to remember is that your retirement accounts will pass directly to the named beneficiaries, regardless of what your will or living trust says. Estate taxes and long term care expense can take a big bite out of your assets if you don't develop a good strategy to bypass them or handle them.