Need to Know: What to do in the year before you retire

If retirement is going to be a reality to you in the near future, it’s important to make sure you spend the year leading up to retirement effectively. After working so hard to plan and save for the retirement you want, make sure you use your final year to ensure you can enjoy the fruits of your labor. Here’s a primer on what you need to do:

Determine if you retire when you think you can.
Everyone has an age in mind, but it’s important to make sure your dream matches up to reality. Analyze your spending habits and compare them to what you expect to receive annually from your various income sources — be sure to include Social Security, pensions, and annuities. What does that analysis tell you? How do you need to adjust based on the results?

Figure out how to handle your 401(k) or other retirement accounts.
Upon retirement, you generally have three options with an employer-sponsored plan. You can transfer the money into an IRA, leave your savings where they are, or cash out the account. Each option comes with associated pros, cons, and, in some cases, penalties. Make sure you understand the implications of each option.

Decide what to do with employer stock
Much like your retirement accounts, you will have options when it comes to employer stock. Again, each option has parameters, so it’s essential to fully understand each one.

Plan how to avoid penalties on early withdrawals.
Early withdrawals (typically considered before age 59 1/2) often carry a 10% tax penalty. But did you know there may be exceptions to this penalty? For example, if you leave a job after age 55 (or 50 for certain types of public employees), you can withdraw from that employer’s plan without penalty. This is just one example of the scenarios that may help you avoid early withdrawal penalties.

Decide on how your pension benefits will be paid.
Pensions can usually be paid out in one lump sum or as annuity payments (i.e., a regular sum of money on a regular basis that lasts your lifetime as well as the lifetime of your spouse). Understanding the tax implications of both options and exploring how the pension money might be used can help guide your decision.

Decide on when to start Social Security
Typically, you can begin receiving Social Security any time between the ages of 62 and 70. But it’s important to understand how your age affects your monthly income. You can walk through various scenarios on the Social Security website.

Line up health insurance
Your age will likely affect the health insurance options available to you — so it’s best to sit down and determine your health insurance scenario well in advance of retirement.

These are just a few of the key steps you should take in the 1-2 years leading up to your retirement. Planning for retirement can be overwhelming, which is why the Robin S. Weingast & Associates team is here to help. Contact us today so we can be sure you’re on the path to a happy and fulfilling retirement.

 

Resource of the Month: Annual Financial Review

It’s hard to believe it, but we’re approaching the end of 2017. So much can change in a year, which is why our Resource of the Month gives you a rundown on six financial things you should monitor annually to make sure you’re staying on track and that your financial plan has adapted to your life.

Podcast of the Month: Life Insurance as an Asset

Life Insurance IconWhen you think of your most valuable assets you probably consider big ticket items such as your home or vehicles, but have you considered that Life Insurance could be on the list? Life Insurance is so much more than a death benefit, and 40-year Insurance Industry Veteran John Wheeler is here to show you just how valuable it is in our latest monthly podcast!

 

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