You may have saved and planned for years by the time you are ready to retire. You’ll need to plan how you will use your savings to meet your post-retirement needs.
This retirement checklist includes five key tasks that will ensure you have enough income, estate planning and health care.
1. Register for Medicare
Medicare does not cover all expenses, so it is worth looking into additional coverage for things like nursing home care or dental care.
2. You can plan for income from retirement accounts
NerdWallet’s retirement calculator will show you if you are on track to retire early with enough money in your 401k, IRA, or other retirement accounts. You can also check to see if there are any 401(k), IRA or other retirement accounts that you may have from former employers.
Keep the following rules in mind if you are planning to rollover your 401(k), IRA, or other retirement accounts. Depending on the type of IRA you have, you might need to begin taking out money annually at 72.
A financial advisor can help you plan for the future and check your readiness to retire.
3. When to begin receiving Social Security
When you apply for Social Security benefits, you will need to make a decision. For people born after 1960, the full retirement age for Social Security benefits is 67. However, you can opt to get benefits sooner or later.
Social security benefits can be started as soon as you turn 62. However, your monthly checks could be permanently cut by up to 30% if you do so. You can also defer your Social Security benefits until you are 70 to get more social security benefits.
How your Social Security income compares to other income sources, such as your 401k, could all impact your decision.
4. Update your estate planning
As you age, your employment, income, and insurance can all change. It’s a great time to review your estate plan. These are some things that you might want or need to update.
5. Be prepared for surprises
Without warning, unexpected costs can arise for home repairs, health problems, or changes in your tax bill. While you may not be able predict the future, you can plan your finances to handle it.
You can have an emergency fund to cover unexpected expenses. The Consumer Financial Protection Bureau recommends that your emergency fund be accessible, safe, and not easily accessible. It should also be kept in a location where it isn’t possible to use for non-emergencies. It might be worth considering a dedicated bank account.
An emergency fund should be able to cover three to six month’s worth of expenses. However, any amount is better that nothing. NerdWallet has an emergency fund calculator that will give you more advice based on your expenses.
It is possible to act quickly to avoid any unexpected costs, especially in the area of health care. A person who turns 65 will have a 70% chance to need long-term health care. However, Medicare does not cover all long-term care.
Long-term care insurance can help you prepare for possible expenses. You can save money by purchasing coverage earlier in life. However, it might be more difficult or impossible to purchase coverage after 75. Consider other options to long-term insurance such as annuities, life insurance policies and short-term policies.