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Retirement Checklist

So, you’re thinking about retiring?  Good for you and congratulations on a lifetime of hard work! Before you make the big leap, there are a number of things to consider.  Some of the decisions are irreversible so it’s important to take the time to review the options and consider how the outcomes will affect you.

  1. Budget and Cash Flow Management: Do you know how much you are actually spending both on normal month to month expenses and the bigger ones? (Think home maintenance).  And, do you have a cash flow management plan in place to identify which accounts you’ll tap into in the early, middle and later phases of retirement?  This is especially important if you retire before age 59 ½ when there may be a penalty for early withdrawal from retirement accounts.
  2. Investment Review: A pre-retirement investment review is essential because this money needs to last! Statistics say that if you are married there is a 50% chance that one of you will live to age 90.  Are your assets positioned to prepare for your needs throughout retirement in a comprehensive, risk appropriate and tax efficient manner?
  3. Build an Emergency Reserve: Even people who are retired should have a certain amount of their expenses set aside in an emergency reserve.  Depending on your situation, this may mean 3-6 months, 6-12 months, or more. Accessing an emergency fund for an unexpected expense save taxes, potential fees, and diminishes the impact of market volatility.
  4. Consider Health Benefits. You may qualify for retiree health benefits, you may be able to stay on a spouse’s or partner’s plan if they are still working or you may be eligible for Medicare.  There are a lot of considerations here that can have a significant impact to your health benefits and your long-term financial plan.  Make sure you understand the costs associated with each choice. Even with Medicare, there are out of pocket costs to consider.
  5. Review your Social Security options. This is a very important decision that can include your spouse or partner’s options.  In many cases, once the decision is made it is irreversible.  It’s important to understand how your choice affects your long-term outcomes.
  6. Do you have equity compensation to consider?Some options and/or RSU’s may expire at retirement and some may continue to vest based on age and years of service. Make sure you understand these details.
  7. Understand your insurance needs. Most people have life insurance and sometimes long-term care insurance through their employer.  It’s possible that these policies could convert to personal policies at your retirement.
  8. Long-Term Care: Clients often worry about long-term care needs and rightfully so, as these present one of the biggest unknowns in retirement.  The average length of a long-term care event is 3 ½ years and can cost a small fortune.  Many people are surprised to learn that Medicare would only pay a fraction of these expenses, if at all.
  9. Mortgages and HELOC’s: Consider re-financing your home or establishing a HELOC before you retire. These are easier to do when you are still working and have reportable income.
  10. Review Pension Options: Not many companies have these anymore, so that’s why it is number 10. However, if you are one of those that do, review and plan for the options available to you.  Again, these choices are likely irreversible so making sure you know all the details is critical.

Want more? Here are 10 non-financial things to consider before you retire:

Download The Checklist

Working with a financial advisor will help to answer many of these questions.  Private Ocean advisors have many years of education and experience to help walk through these details.  Please contact us if you would like to discuss.