Retirement Planning Doesn't End at Retirement
By John Brummitt
It is a common belief that the hardest part of retirement is getting there—putting in your hours, days, and years building the nest egg you will live on for 25 to 30 years. Yet after the heavy lifting of funding your nest egg is done, you can’t simply put retirement planning in autopilot. The key to a successful retirement is to make sure you are maintaining and tweaking your plan as you go along.
Throughout your working career, you make adjustments to your spending and saving habits; retirement is no different. This stage of life is not an extended vacation. You will fare better with a purpose and a ministry pushing you forward: “Commit thy works unto the Lord, and thy thoughts shall be established” (Proverbs 16:3).
Adjustments to your retirement plan are critical to ensure funds will last and you are satisfied with your quality of life. Work through a yearly checklist to affirm your financial situation is on track with your current lifestyle and needs.
Check your Medicare yearly. Currently, open enrollment for Medicare runs from October 15 to December 7. During this time, you can make changes to plans and coverage to make sure you are receiving full benefits. Health plan or prescription drug coverages change annually, and adjustments may prove advantageous moving forward. Healthcare costs are the greatest retirement expense, averaging around $220,000 per retired couple according to research by Fidelity Investments.
Tax changes also affect your nest egg and decisions in retirement. Income from pensions, qualified retirement plans, and IRAs, whether 401(k) or 403(b), contribute to the retiree’s annual net income. A higher income amount from these sources can make your social security benefits taxable in retirement. Currently, married couples making over $44,000 per year in retirement income are subject to a tax on 85% of Social Security benefits. Delaying the start of your Social Security benefits could be to your advantage if you know funds will deplete over time, dropping you under the tax limit. Plus, you gain bonus percentage on your Social Security benefit by waiting past full retirement age before drawing.
Finally, make it a yearly habit to review beneficiaries on accounts and do basic maintenance on wills and estate plans. These are not documents you can set aside and forget. They need to be updated annually, or anytime you have a major life change such as a new grandchild or the death of spouse. Making sure your documents are up to date will save you and your family time and make the grieving process less stressful. Also, discuss with your family plans for your estate once you and your spouse pass. Giving them a head's up regarding who will inherit or how much of the estate should go to each child or entity will go a long way toward ensuring your close-knit family stays that way after you are gone.
“And let us not be weary in well doing: for in due season we shall reap, if we faint not. As we have therefore opportunity, let us do good unto all men, especially unto them who are of the household of faith” (Galatians 6:9-10).
About the Writer: John Brummitt is director of the Board of Retirement. Learn more: www.boardofretirement.com.