It appears we are all told to start retirement planning as soon as we enter the work force. Of course, there are good reasons for that sage advice. The earlier you begin your retirement plan, the more comfortable you will be during your retirement years. If you are now nearing your “Golden Years,” however, there are additional steps you should take to ensure that your affairs are in order. To help you get started, the Grand Forks elder law attorneys at German Law suggest that you take the following steps shortly before, or at the same time, you retire.
- Choose your retirement destination. This is undoubtedly something you have been thinking about for many years; however, there are several good reasons not to make a final decision until you are close to retiring. From a personal or emotional standpoint, you may be very attached to where you already live. Then again, that attachment may begin to disappear as you near retirement age and realize what it will cost to remain where you are. If you will be living on a tight fixed income during your retirement years, it may time to consider moving somewhere where the cost of living is favorable. Whether you stay where you are or choose a new destination, now is the time to make that final decision.
- Get estimates for early, on time, and late retirement from the SSA. Do you know exactly how much you will receive in Social Security retirement benefits when you retire? Most people don’t. More importantly, the amount you receive will depend, to some extent, on your age when you begin collecting those benefits. The government makes you wait until “full retirement age” to start collecting the full retirement payout that you’ve earned. Full retirement age used to be 65, but Congress voted in 1983 to raise it to 67 for everyone born in 1960 or later. You can start collecting as early as age 62; however, your monthly benefit will be reduced. Conversely, your benefits payment goes up 8 percent for every year after full retirement age that you delay collecting payments, up to age 70. To get a better idea of how much your retirement benefits will be, navigate to the Retirement Estimator on the SSA website.
- Make sure you have a long-term care plan. A 65-year-old entering retirement today already stands a 50-70 percent chance of needing some type of LTC before the end of his/her life. Those odds increase with each passing year and are shared by your spouse if you are married. Neither Medicare nor most private health insurance policies cover LTC expenses; however, Medicaid will cover LTC expenses if you qualify for benefits. At an average annual cost of over $100,000 nationwide (as of 2021), over half of all seniors turn to Medicaid for help paying for LTC. Unless you can afford to pay for LTC out of pocket, Medicaid planning should be part of your estate plan before you enter your retirement years.
- Merge your estate plan and retirement plan. Throughout your working years, your retirement plan and your estate plan may have been separate plans. As you near retirement age, however, those two plans should be merged to ensure that they work in harmony with one another. It is common, for example, to make significant changes to your asset structure when you enter retirement. That, in turn, should trigger a corresponding change to your estate plan.
- Review all retirement and financial accounts with a financial advisor. Sit down with your financial advisor and make sure you are clear regarding when you can begin distributions from retirement accounts as well as when you must start those distributions. Also, create a retirement budget. You have likely done this before using estimates; however, those estimates will probably have changed. Now that you are counting down the days until you retire, it only makes sense to do a final budget.
Contact Grand Forks Elder Law Attorneys
Please join us for an upcoming FREE seminar. If you have additional questions or concerns about how to prepare for retirement, contact a Grand Forks elder law attorney at German Law by calling 701-738-0060 to schedule an appointment.