WHAT TO DO IF YOU RETIRE THIS YEAR

I have spoken to just about every one of my clients at some point regarding retirement. And, you know what, it seems insignificant, but determining when to retire really comes down to timing! If you pull the trigger too soon, you may not have all of your ducks in a row.  But, if you wait too long, you find you are not enjoying work at all, in fact; the majority of those working past age 65 say that the last year is brutal.

The best thing you can do for yourself and for your family when you retire is to properly "Properly Plan Your Retirement". This involves speaking with your Financial Advisor and setting a target for the money you want to have when you do retire.

I hope you enjoy this article and I hope you are motivated to put your plan into motion so that you and your entire family can plan on enjoying your Golden Years. I simply wanted to give everyone something to think about before you finally put your briefcase in the closet for good! 

•  Did you know that the two biggest factors in having a successful retirement plan are centered around Retirement Income and Healthcare Costs.
•  Everyone should spend some time with a Medicare Broker, just getting a feel for what Medicare will cost in retirement.  I know you cannot be 100% accurate in projecting premiums too far in advance, but retirees need to understand the financial implications of Healthcare once they retire.  
•  You need to effectively plan and understand Medicare.  Including but not limited to your Medicare options, and knowing what sort of costs you will have with the plan you think fits you and your lifestyle the best.
• You need to ask questions and know how Social Security and IRMAA work, before being surprised, and not necessarily in a good way.  
•  Know that you have prepared your Estate Plan, Living Wills, and Beneficiaries for all of your investments, pensions, etc and that you have a Long Term Care Policy in place, as well as Life Insurance or a Final Expense policy in place.

There are a lot of things to consider.  But the better prepared you are, the more enjoyment you will get out of life, and the better example you will set for your Children and Grandchildren. 

As a Medicare broker, we understand how critical withdrawals are and the problems they can create. Medicare’s Income-Related Monthly Adjusted Amount (IRMAA) is something all Medicare Beneficiaries need to consider every year when making these income and withdrawal decisions in retirement. 

IRMAA determines the additional costs you might incur for Medicare  Part B and Part D premiums based on your modified adjusted gross income  (MAGI). Social Security looks back at your income tax two years before determining your Medicare premiums. To manage IRMAA, you want to minimize your taxable income, such as Roth IRA conversions or calculated timing of capital gains. 

Understanding the income thresholds for IRMAA is crucial. If you enter a higher income bracket, it can lead to increased Medicare premiums, which may not be something you prepared for when initially planning your retirement. Stay informed about these yearly thresholds to help manage your income and mitigate any financial surprises. 

Health Savings Accounts (HSA) offer significant tax advantages and a unique opportunity for retirement planning. 

Before applying for Medicare, you can contribute to your HSA.  However, you cannot contribute to an HSA when you are enrolled in any part of Medicare. So, if you plan to enroll in Medicare when you turn  65, you want to stop contributions before the 1st of your 65th birthday month to avoid a potential IRS penalty. 

If you continue to work past 65, our advice is to quit making HSA contributions 6-12  months before enrolling in Medicare. This is because your Medicare Part A will become retroactive by six months. 

Either way, your accumulated HSA funds can be used tax-free for qualified medical expenses during retirement, including Medicare, Medicare Advantage, and even your Medicare Part D premiums, providing a valuable financial cushion for any foreseeable healthcare costs. One other often overlooked option is you can use a portion of your HSA funds to pay for LTC Premiums.  These amounts are typically, limited by your age, but it is certainly worth looking into.

Medicare primarily gives coverage to those 65 and over, so right around the time most expect to enter retirement. However, did you know failing to enroll at the right time can lead to Medicare penalties that will never go away for the rest of your life?  Even though these are typically, not large amounts, you have worked too hard to simply give money away. If you do not sign up for Medicare during your Initial Enrollment Period or do not have creditable employer coverage, delaying enrollment may result in permanent penalties you’ll have to pay in addition to your monthly premiums. 

Social Security remains a cornerstone of retirement income for many individuals. If you anticipate Social Security as your primary or only source of income in retirement, consider maximizing your Social Security benefits by delaying your claim. 

You can start receiving Social Security Benefits as soon as you turn 62. However, the longer you can delay it, the higher your monthly amount will be. full retirement age (FRA) or beyond can significantly increase your monthly payments. 

Working with a financial advisor can help you develop tax-efficient withdrawal strategies. There can be certain tax implications when tapping into different retirement accounts, so it’s essential to understand how to optimize your income while lowering tax liabilities simultaneously. Especially during the early years of retirement, when you’re still getting used to this transition, getting a handle on how and when to withdraw can be beneficial. 

Create a clear estate plan that includes a will, power of attorney, and healthcare directives. 

If needed, be sure to discuss your intentions and reasoning behind certain decisions among family members and loved ones to avoid potential future disputes. 

If you have two homes in different states, check with your Estate Planning Attorney and see if there are advantages to where you claim your full-time address in retirement.

One subject matter we often see slip through the cracks is the potential need for long-term care insurance. This type of insurance can help protect you if you need extended care in a nursing home or assisted living facility. 

If you have never had to broach this subject with your parents, trust me, this is something you need to plan for.  Spend a few hours understanding what the process is for qualifying for Assisted Living or Nursing Home Care.  It is frightening.  

Remember, women generally will outlive their husbands, they typically are the main caregivers in the home, but what happens if you are not there anymore?  You need to be proactive and have a plan in place so that they are secure and have options for themselves, whether that is staying at home using Caregivers or eventually moving into an Assisted Living Facility.

Don’t wait until the need arises; Medicare does not cover most costs associated with assisted living, and long-term care can be pretty expensive. Evaluate your options when beginning retirement planning to help minimize any future financial setbacks this issue could cause.

At the end of the day, retirement planning is all about maximizing your benefits and minimizing any potential pitfalls. If you can implement these tips for retirement and optimize the different facets of your path to retirement, you can succeed in staying the course you have mapped out and enjoying smooth roads throughout your retirement.

•  Each of the decisions you make in retirement, has a greater cause and effect than when you were in your 40's. Be cautious and strategic in your decision-making. Invoke the Beach-Ball Theory so that you are looking at things from every conceivable position and angle.  Your retirement decisions must be strategic and should involve a multitude of aspects to take into account.
•  Consider seeking advice from Medicare experts or financial advisors to optimize retirement benefits. It never hurts to meet with an experienced Medicare Broker and just have a conversation. Then, judge for yourself if you think you would benefit from having an expert in the field to assist you.  It will not cost you anything but a few hours of your time.  
•  Plan ahead for potential healthcare needs and financial issues to ensure a secure retirement lifestyle. The easiest thing to say is to ask what you want out of your health plan today, at age 64 or 65, the hardest question for many people to answer is, but what do you want from your Healthcare plan when you are 70 or 80?