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10 Things to Think about Before You Retire


The transition from working to retirement is an exciting time in a person's life; however, it can also be scary for those who do not prepare properly.

The transition from working to retirement is an exciting time in a person’s life; however, it can also be scary if you are unprepared. Here are 10 things you should take into consideration as you close in on your retirement date to make the shift as smooth as possible.

1. Budget

Prepare a budget that takes into consideration typical monthly costs and big potential expenses (e.g., travel, home renovations, moving, etc.)

2. Second opinion

Meet with a financial planner to determine if you are really financially ready to retire. There are some financial advisors who offer consulting agreements (i.e., hourly rates) if you do not seek comprehensive wealth management services.

Whether you want only investment advice or more comprehensive wealth management, a second opinion will give you a peace of mind. Do some research on their qualifications. If you are seeking a fee-only advisor, check out the NAFPA website.

3. Rainy day fund

Re-evaluate your emergency fund. We typically suggest a 12- to 18-month emergency fund of cash assets for a working couple or a couple where one is working and one is retired.

For a couple where both are retired, we would suggest 2 full years of cash available to fund living expenses. That will help avoid having to sell investments to raise cash in a down market.

4. Health

Figure out what you will do for health insurance once you leave your job. Will you be seeking private insurance or do you qualify for Medicare? Become well versed on your options and how to get benefits. Remember, Medicare does not include dental or vision coverage.

5. Living arrangements

Start considering where you want to live and whether downsizing may be an appropriate option for you. Get your house appraised — knowing that value could give you peace of mind. After all, most people’s largest nest egg is their home.

6. Estate planning

Re-evaluate your estate planning documents and make sure they are in order.

7. Insurance

Re-evaluate your current risk management policies. In particular, make sure you don’t let your insurance policies lapse. Re-evaluate your needs and costs. If you are working part-time or doing consulting work during your retirement, check to see what potential liabilities you may have and whether you can insure against them.

8. Tax planning

Meet with your accountant to talk about estimated taxes in light of your retirement. What is your new income bracket, and how does that affect you?

9. Benefits

Before you leave your job, what benefits does the employer provide? Meet with your HR manager to make sure you are aware of all your options. Anything that could put more money in your pocket will be helpful as you transition to retirement (i.e. deciding between single life or joint and taking a potential lump sum dollar amount for unused vacation days).

10. Social Security claiming

Decide on a Social Security strategy. Consider seeking professional assistance before you elect a benefit payout option.

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Victor J. Dzau, MD, gives expert advice
Victor J. Dzau, MD, gives expert advice