The 2017 Financial Retirement Checklist

2017 Financial Retirement Checklist

Retirement represents a big change in your day-to-day life. Instead of a day at the office, you can look forward to pursuing your hobbies, spending time with friends and family and catching up on the long to-do list that you set aside to focus on your career. However, before moving forward with your 2017 retirement plans, make sure you are fully prepared by checking off the most critical financial details. Through careful retirement planning, you can move into the next phase of your life with complete financial security.

Do You Know Where Your Income Is Coming From?

As part of the labor force, you are probably accustomed to having a regular paycheck. The loss of income after retirement can be a shock if you haven’t prepared. Before setting a date for your transition from employee to retiree, make sure you understand exactly how you will pay your bills. Consider all of your income streams, and plan ahead on whether and how each will be utilized.

Common examples of retirement income include the following:

In some cases, it may be sensible to leave certain accounts untouched in case they are needed later in life. For example, there is no required age at which you must take Roth IRA distributions, so these funds can continue earning and compounding interest indefinitely. If you require long-term medical care at any point, it may be helpful to have this amount set aside.

On the other hand, investments such as annuities offer a reliable income stream for the duration of your life, depending on the type of annuity you purchase. These investments offer you the peace of mind of knowing you will never outlive your savings, and regardless of economic ups and downs, you can always rely on a consistent level of income. Working with a financial advisor can provide additional insights and guidance on which accounts to contribute into so that you can maximize earnings over your lifetime while minimizing tax liability.

Do You Have a Nest Egg?

Many individuals creating a retirement savings strategy at some point during their career to ensure that they would have the opportunity to choose their lifestyle after retirement. By setting aside a nest egg, you don’t have to rely on social security and investment income exclusively, as there is an amount available for unexpected expenses. Medical care often becomes the largest expense after retirement, and your savings provides a cushion so that a medical emergency doesn’t turn into a financial emergency. With individuals living longer, and medical expenses rising, that nest egg may not be enough for you to rely on.

Have You Signed Up for Medicare?

As mentioned, medical expenses are one of the biggest financial issues you will face after retirement. Securing health insurance is critical to ensuring financial security. You are eligible to begin using Medicare as of the first day of the month in which your 65th birthday falls. If you are already receiving Social Security, enrollment in Medicare Parts A and B is automatic. Otherwise, you must start the enrollment process approximately three months before your birthday.

When you enroll in Medicare, whether you are receiving Social Security payments or not, you will have a number of decisions to make. You will automatically receive Medicare Part A, which covers in-patient hospital expenses. You have the option of enrolling in Medicare Part B, which covers many of the other health care expenses incurred over the course of a year, such as preventative care, medical test, and some physician fees.

You will also have the opportunity to select Medicare Part C, also known as Medicare Advantage, which includes Parts A and B, in addition to dental, vision and other wellness benefits. However, you can expect to pay an additional premium for this coverage. Finally, you can elect to enroll in Medicare Part D, which is the prescription benefit plan. Before choosing this coverage, compare the cost of your medications to the cost of the plan to determine which offers you greatest value.

Are You Prepared to Save More?

After your retire, you’re no longer eligible to contribute in your employer’s sponsored 401-k plan, however, you can still set aside a portion of your income to ensure you can meet your expenses. Budgeting basics apply here: spend less than your income, save as much as possible, and be aware of where your money is going. Small charges add up quickly, and the amount spent on a daily coffee over the course of several months could easily fund your next adventure. After all, retirement isn’t the finish line – there’s still a lot of race left!

Many retirees choose to invest in an annuity shortly after they leave the workforce while they have the income available to invest. For example, you can open a deferred annuity prior to retirement and make contributions up until you retire. This is particularly wise for individuals who continue to earn income in some capacity, for example consulting, in the first years after they have officially retired. Purchasing an annuity now guarantees income in later years.

Retirement planning is a lifelong task that doesn’t end when you resign your position. Consider meeting with a financial planner to review your current retirement plan or draw something up for the future. This simple action can help you to secure your future, so that you have the income you need to enjoy the lifestyle you want throughout your retirement years.

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