New York Estate Planning & Elder Law Blog
Making the move from working to retiring requires smart planning and decades of preparation. You may have married, bought a home, raised children, and enjoyed a successful career – all of which you are ready to fully enjoy. As you make the transition to retirement, here are some key steps to take first as explored in a recent Forbes article:
Prepare a Retirement Budget
Create a budget that takes into account your typical monthly costs of living in addition to any plans for big expenses. These can include travel plans, home renovations, moving, gifts, and the like.
Check that You are Financially Ready
Meet with a financial planner and your estate planning attorney to make sure that you are financially ready to retire. A second opinion from the experts can give you peace of mind that you have set aside enough to live comfortably.
Assess Your Emergency Fund
Most experts agree that for a couple where one spouse is retired and the other is still working, you should have an emergency fund that could cover twelve to eighteen months in cash assets, just in case. If both spouses are retired, the recommendation is increased to two years to fully fund all living expenses. It will help you avoid needing to sell assets to raise cash in a downturned market.
Figure out Healthcare Insurance
Know before you retire what you will do for healthcare insurance once you leave your job. Private insurance and Medicare are two popular options for retirees. Keep in mind that Medicare does not provide for dental or vision coverage, so if you choose that option you must find that coverage elsewhere.
Consider Downsizing Your Home
Once you have retired and all of your children are out of the home, you may want to consider downsizing your current living situation. Consider moving into a smaller home, or a home that is a single floor in order to avoid arthritis-inducing stairs in your later years.
Update all Estate Planning Documents and Beneficiary Forms
Before retiring, double check all of your estate planning documents and beneficiary forms. Make sure that this major life event will not shift your inheritance plans or trust instructions. Because accounts with beneficiaries attached do not fall under the instructions in a will, it is especially important to double check all beneficiary designations.
Examine Risk Management Policies
Risk management policies refer to insurance plans, weighing needs and costs of items in your life, and deciding whether you should take up a part time job or do consulting work in order to make a little extra money in your retirement.
Discuss with an Estate Planning Attorney any Tax Implications
Retiring can have some major tax implications on your life, some good and others not so good. Consult with your estate planning attorney to see how your retirement may affect your tax filings for the coming years.
Double Check Your Retirement Benefits
Before you leave your job, double check that you know exactly what retirement benefits that you should be expecting from your employer. Meet with your HR representative to know what all of your options are, and make sure that you are maximizing your benefits as you retire.
Create a Social Security Strategy
The final thing to do before retiring is to create a Social Security strategy. Technically, you can start receiving reduced benefits at age 62, but you can receive more if you wait until you are 66 and the most if you wait until you are 70. Look into your current retirement situation and figure out when would be the best time to start collecting your Social Security benefits.