Things to Do Before You Retire

You’ve done it. You’ve made the decision to retire. You’ve worked your whole life to get to this point and now that time has come. You have a date picked and it’s marked on the calendar and the count down has begun. What are some of the things we need to do before that date comes around? Some of these here I’m going to talk about at the beginning are more short-term in nature and some of them are looking out a little bit longer. But the short-term things are is be clear about when your benefits stop at work. As an example, when do you get your last paycheck? Is there vacation time or unused sick time coming out? How is that paid to you? Is there withholdings from that, that are appropriate? Is there contributions made into your retirement plan from that? And when is the last direct deposit going to hit that bank account of yours, so you have those income sources coming in? When are health insurances going to expire if you’re getting health insurance from your employer? Are they going to stop the day you retire? Are they going to continue through the end of the month or do you have some other arrangement set up through your retirement or through some COBRA policy or something like that to see when that comes into place? This can be vitally important when you think of health insurance depending upon when you retire in your plan year as well. If you’re somebody uses health insurance often and you’ve kind of used up or met your deductible and so now your expenses are being covered in full or mainly in full in many cases versus paying into a deductible. Maybe there’s a reason you should be seeking to wrap up maybe some things that you have or getting those check-ups or appointments taken care of before you come off from that policy. So also, what are some expenses you have coming short-term? Is there anything bigger coming up? Maybe your property taxes are due. Some large home expense that you have that’s coming up. Maybe you need a new vehicle. A big trip you’ve been planning to celebrate your retirement. Is there any big expense coming up that you need to financially plan for between as this income is slowing down or stopping and then whatever your retirement income is picking up? With that said, is this expense going to incur financing? Is there some sort of financing need that you’re going to have? Whether it’s financing a vehicle. Financing a purchase of a second home or something like that? Sometimes from a qualification standpoint, it looks a little easier in some circumstances. It looks a little better on paper if you have income coming up versus being retired. So applying for financing while you’re still employed versus being retired, potentially could be beneficial in that situation. Then, now looking a little bit more long-term in nature. So remember, I earlier just talked about kind of when that paycheck stops. So when does your retirement income start, right? When does Social Security start if you’re electing to take that at retirement? You know, how long is it going to take to set up an income stream from like your 401K or your IRA? When are those payments going to start? If you’re fortunate enough to have a Pension, when is that first Pension payment going to hit and how is it being deposited into your account and what sources and all that sort of stuff? Maybe you have some annuity that was set up before or you purchased some sort of income annuity. When do those payments start? Are they deferred or when are they going to be paying out to you as the account owner and stuff like that? So again, one income source probably is coming to an end, your employment, right? And what is going to pick up from that perspective? And since we’re talking about money coming in, what’s going out? What does that retirement budget look like? What is that day to day expense that you’ve mapped out hopefully, of what that is. Obviously, household bills and expenses and stuff like that. But some of these may be hobbies that you haven’t had the time for now, that you look to hope to do more. Maybe it’s traveling or something like that. Again, mapping out that budget is vitally important so you understand, again how all of this looks. Now hopefully you’ve done many of these things well in advanced so you’re not rushing at the end of doing this. Making sure you have these pieces here so that transition in retirement goes as smooth as possible. Depending upon what your age is where you retire is going to play a role in some of these, right? Obviously, if you’re not old enough yet to collect Social Security, you’re not going to take it. Now also depending upon when your retirement age is, you got to be careful because some certain accounts don’t allow for distributions prior to certain ages or there’s penalties for early distributions. As an example, IRAs, 59.5, right? So if you take funds out of an IRA, prior to 59.5, you’re going to pay a 10% early distribution penalty. If it’s from that 401K you’re retiring from, it’s only 55. You know some 457 Plans, it could be even sooner than that. So again, knowing these rules, matching up with what your retirement plan looks like is so important. So take the time, sit down with a qualified Financial Advisor and map this out so your retirement can be as smooth as possible and you can plan to retire well.