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A Few More Things for Your “Honey Do” List: Retirement and Estate Planning

MP900442488Most of us rely on lists to keep track of holiday festivities, so if you’ve already got a big “to-do” list, consider adding a few more items so your retirement is as much fun as the holiday season.

People who love making lists and crossing off tasks as they are completed, know how helpful lists can be for everything from work to vacations to the holiday season. However, lists are also great tools for retirement planning, according to The (Sterling, CO) Journal-Advocate’s article, “Here's your retirement 'to do' list.”

Timing your retirement. You may have long expected to retire at a certain age, but be certain that it’s the best for your overall financial situation. If you enjoy your job and you stay for a few more years, you may dramatically increase the funds in your 401(k) or other retirement plan. You might also even be able to delay taking Social Security, which would mean larger monthly payments.

Retirement lifestyle. Try to estimate the cost of your retirement lifestyle. When you know what your retirement lifestyle might look like, you can better calculate your costs and expenses. These figures will help you decide how much you’ll need to withdraw each year from your retirement accounts, like your IRA, 401(k), or other employer-based plan.

Retirement plan withdrawals. In addition to knowing how much you’ll need to withdraw from your retirement plans, you also must know how much you are required to withdraw. When you turn 70 ½, you typically must begin withdrawing money from your traditional IRA and 401(k) accounts. These required minimum distributions or “RMDs” are based on your account balance, age, and other factors. If you fail to withdraw the full amount of the RMD by the deadline, the amount not withdrawn will be taxed at a 50% rate.

Health insurance costs and coverage. When you turn 65, you’ll likely be eligible for Medicare.  However, you should understand the things that it does and does not cover in order to create your annual health care budget. If you want to retire early, you may lose your employer-sponsored health insurance. You’ll need to be ready for the prospect of large out-of-pocket costs.

Long-term care. Remember that Medicare doesn't cover (or only covers a small portion of) long-term care. Look into a way to reduce your risk by speaking with a knowledgeable attorney.

Estate planning. An estate planning attorney will be able to help you with the documents that are necessary to distribute yours assets and plan for incapacity. This includes a will, a living trust, power of attorney, healthcare directive, and other documents, depending on your situation.

Once you’ve checked these items off your retirement and estate planning “honey do” list, you and your spouse will be better able to enjoy your pre- and post-retirement life.

Reference: The (Sterling, CO) Journal-Advocate (December 13, 2016) “Here's your retirement 'to do' list”