It’s 2013 and the oldest of the baby boomer generation will turn 67. Even though many are already retired, there are still a few still in the workforce and aren’t financially prepared to head out for good. As the closing moments of the retirement decision and the last day are nearing, one should feel confident about their decision to retire. Here are some tips to consider prior to the last day of employment.
1. Calculate your basic living expenses and sources of income – It’s crucial that you zero in on your exact expenses as well as the sources of income you’ll use to cover those expenses. Ideally, these costs should be addressed by some type of guaranteed income source (pension, annuity, etc.). Once basic living expenses are taken care of, it’s much easier to plan for the fun parts of retirement.
2. Determine how to make your employer -sponsored retirement plan last – Unlike previous generations; pensions are no longer the front runner for guaranteed income. You are responsible making that money and find a strategy that ensures it will last you during your retirement years. Many retirees allocate a portion of their assets to an annuity with some kind of guaranteed income stream that you can’t outlive.
3. Get Clarity on Social Security – People may receive 20-30% less in their benefits based on Social Security Administrations calculations if they start w/d’s before age 70. Make sure you are maximizing your Social Security Benefits.
4. Inflation and Health Care costs – According to the recent Retirement & Politics Survey from Allianz Life, inflation and health care costs are two of the greatest concerns for boomers. The average inflation rate since 1914 is 3.4% and the average rate during the 1970s was a staggering 8.1%. Health care costs, which are very important in our later years, are dramatically impacted by inflation. Without a plan to address these factors, you’re retirement income might run out faster than you think.
5. Streamline your retirement accounts – If possible, you should try to consolidate any retirement accounts to simplify your record keeping and mitigate the impact of taxes and RMD’s.
6. Make sure your family is protected – To gain true piece of mind and ensure your family is protected in case retirement doesn’t last as long as you’d planned, it’s a good idea to establish a will and/or living will, making health-care directives and addressing power of attorney.