A Retirement Checklist

As you approach retirement, there are many important decisions to make and factors to consider. Use this guide to help keep track of all the details.


Keep Track of Key Dates and Deadlines

Mark your calendar with any application or election deadlines. Remember, it often takes much longer than you think to prepare and process retirement-related paperwork. To streamline the process, gather all supporting documents, such as last year’s W-2 forms, birth certificate, social security card, marriage or divorce papers, citizenship or naturalization documents, and military discharge papers.

  • Contact the Social Security Administration (SSA) three months before you expect to receive your first check.
  • Employer-provided benefits do not start automatically. Contact current and former employers to find out about any decisions you will have to make, including your payout options. Many of these decisions are irrevocable, so ask us how various options will fit your financial plan.
  • Contact Medicare three months before your 65th birthday. If you apply for social security benefits prior to age 65, Medicare will contact you to give you the information you need. If you don’t enroll in Medicare Part B when you are initially eligible, you will incur a 10 percent premium surcharge for the rest of your life. If you are covered under your own or your spouse’s current employer, you will have a special enrollment period for Medicare Part B after your coverage ends and will avoid the 10 percent surcharge. Keep in mind that health insurance under COBRA is not treated as employer-provided coverage for Medicare purposes. Talk to your employer’s human resources department to determine how your current health plan coordinates with Medicare.


Review Your Financial Picture

Next, inventory the resources available to you in retirement.

  • Calculate your retirement income paycheck. Tally all your sources of retirement income and determine how much will need to come from your investment portfolios and IRAs. You may also want to arrange for an automatic deposit of your social security check and retirement account payments into your bank or money market accounts. Visit the SSA website at www.socialsecurity.gov/myaccount to get your benefit statement online.
  • Total your employer retirement plan, IRAs, deferred annuities, and other investment balances.
  • Create a spending plan. List all of your anticipated costs, including discretionary expenses like travel, hobbies, and entertainment. Although certain bills have to be paid, you might be able to trim them. For instance, talk to your cable company about more affordable packages that may be available. And to help ensure a carefree retirement, consider setting up automatic bill payment for predictable expenses.
  • Replenish your emergency fund. Be sure you’ve set aside sufficient resources to cover unexpected repairs, medical bills, and other major expenses.
  • Review your debt. Borrowing money to buy a house or car can make sense, especially if your retirement income is stretched thin. On the other hand, interest payments can drain resources. Make a plan to eliminate credit card and other costly debt as soon as possible.


Optimize Your Resources

As you review your sources of retirement income, keep the following considerations in mind:

  • Social security. Did you know that the SSA considers the normal retirement age to be 66 or 67, depending on your date of birth? Although you can start taking benefits as early as age 62, payments will be permanently reduced for you and your survivor if you opt for early benefits. And, if you continue to work, your benefits may be offset or suspended. Review your benefit statement and ask us about strategies for optimizing your payments.
  • Employer pensions. These typically offer several payout options. The one that is best for you will depend on your cash flow needs, health, life expectancy, other retirement resources, and future financial obligations. As with social security, taking your pension as soon as it is available will permanently reduce your benefits.
  • Benefits from former employers. As mentioned previously, contact any former employers about retirement benefits due to you. You can keep an account with a former employer, but the investment and distribution options may be limited. An IRA usually offers a broader range of investment choices and allows you to consolidate all of your employer-provided plans into one. Consolidation can also reduce the administrative burden, make rebalancing easier, and help you build a more diversified portfolio.


Get a Portfolio Checkup

As stated above, this is an excellent time to review your investment and retirement portfolios. An overly conservative portfolio can be just as risky as an overly aggressive one. Preservation of principal is important for a retirement portfolio, but if your returns don’t keep up with inflation, you may lose purchasing power in the future. Growth investments may still have a place in your portfolio. We can tailor an asset allocation plan that considers your specific income needs, lifetime goals, risk tolerance, and existing investments.

There is one area in which to be conservative, however. A conservative withdrawal rate can reduce your risk of running out of money. It’s a good idea to keep your withdrawal rate at between 4 percent and 5 percent of your retirement investments.


Manage Your Taxes

Determine your tax withholding or quarterly tax payments. In general, your retirement benefits and withdrawals will be taxable at the federal level. They may also be taxed by your state. Social security benefits can be taxed up to 85 percent of their value, depending on your other income.

For convenience, you can have taxes withheld from your retirement benefits and IRAs. Social security recipients can use Form W-4V (Voluntary Withholding Request). Otherwise, you are required to file a quarterly tax estimate on income from all sources of more than $1,000. Use the vouchers provided with Form 1040-ES to make your quarterly tax payments, typically due on April 15, June 15, September 15, and January 15.


Plan for the Unexpected

As you head into retirement, it’s important to consider your future insurance needs.

  • Health insurance. Before retirement, get a thorough checkup, and be sure that you’ve taken advantage of the preventive care services available to you under your employer’s health plan. Keep in mind that basic Medicare does not cover many preventive tests, eye or hearing exams, or dental services. If you have employer-provided retiree health insurance or COBRA coverage, don’t assume that your plan benefits will be exactly as they were pre-retirement. Also look into the options available to your dependents and make plans to ensure that there’s no gap in coverage.
  • Once you retire, activate your retirement health coverage, whether it’s employer-provided, COBRA, Medicare, or a temporary policy to bridge the gap to age 65. Remember, you may need to set aside additional resources for health care expenses in retirement.
  • Long-term care insurance. Consider whether buying a long-term care insurance policy is right for you. People today are living longer but not necessarily in the best health. Many individuals will need long-term care at some point, and Medicare and your other health insurance don’t cover most long-term care needs. In addition, Medicaid, your state’s health care program for people at the poverty level, pays very little for home care services.
  • Life insurance. Talk to your employer about converting your group life insurance to individual coverage. If you’re healthy, you may be able to obtain less costly protection if you shop around for your own coverage; just keep in mind that it may take more time than you anticipate for insurance companies to evaluate your health. If you’re not healthy, you may not be able to get life insurance at any price except by converting your employer-provided policy.


Revisit Your Estate Plan

Finally, review the beneficiary designations for your investment, retirement, and insurance accounts. Do they still reflect your wishes? Will changing beneficiaries throw a wrench into your estate plan by channeling assets outside the terms of your will or trusts? This is also a good time to update your estate planning documents, including powers of attorney, especially if you anticipate relocating.

This material has been provided for general informational purposes only and does not constitute either tax or legal advice. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a tax preparer, professional tax advisor, or lawyer.


NorthStar Financial Partners is located at 959 34th Ave NW, Rochester, MN 55901 and can be reached at 507-281-6650. Securities & Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Advisor. Fixed insurance and services through NorthStar Financial Partners.

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