By: Sarah Stewart Legal Group
Are you or someone you love looking to retire soon? If so, you should review this list and make sure you have done these 5 things.
(1) Determine The Age You Will Retire
Though retiring early seems like a good option, keep in mind that some benefits you receive are increased if you retire later. For instance, Social Security pays more if you retire later and some 401ks will increase distributions if you wait until later to withdraw the money. Of course, keep in mind 401ks usually also have a minimum distribution age that you must consider. They will require a certain amount of the 401k be accessed each year after the owner hits a certain age. Research your options and plan for your retirement now.
(2) Determine The Costs of Your Desired Lifestyle
This step is very important for determining when you retire and how much money you need to retire. Are you wanting to keep the status quo and live much like you have lived until now? Or are you wanting to travel? Do you want to fully retire? Or are you looking to stay active with a part time job? You must decide what your goals are to properly plan for your retirement.
(3) Retirement Withdrawal Rules
I mentioned this one briefly above. Most retirement accounts will require a minimum distribution be taken each year once you reach a certain age. For most accounts, that age is 70 1/2. If you do not begin to withdraw retirement at that age, your retirement funds will be taxed heavily, usually around 50%. Be sure to research this information for your accounts and plan accordingly.
How is your health these days? Do you have any chronic conditions that you will need to plan for, such as diabetes or heart disease? Once you reach retirement age, most people qualify for Medicare. However, if you have health conditions, you will want to consider supplements and the costs of the supplemental insurance into your plan.
And, what about long-term care? Do you have a plan for long-term care? Most nursing facilities run anywhere from $4,000 to $8,000 a month for care. You must factor the possibility of long-term care into your retirement plan.
(5) Estate Planning
Estate planning is not only planning for your death, but your incapacity as well. Though most of us do not like to think about it, as we get older our health and mental state can deteriorate. Do you know someone you trust to help you in that situation? If so, it is much easier to nominate them now through a Durable Power of Attorney, Advance Directive, and/or trust than it will be for them to go to Court to have you judged incapacitated.
Also, you will want to think about your legacy. Who do you want to provide for when you die? How do you want your assets distributed? Who do you not like in your family? Without a proper Last Will and Testament and/or irrevocable or revocable trust, your wishes may not be followed. The law of the state will determine who receives what, when, and how. Most of us don’t like that option.
If you are close to retirement, congratulations! You definitely deserve it! But, be sure to properly plan so that your retirement transition is as smooth as possible.