- Plan Your Estate
It’s important to draw up a will while you’re still well. This ensures that your assets go to the proper beneficiaries. Otherwise, your estate will be divided in probate court and may not be handled how you would’ve liked. Another thing to consider is gifting your money. This may be ideal if you have a large estate and want to make sure your money stays in the family. You can gift $14,000 per person per year without any tax liability.
- Learn About Government Benefits in Retirement
Social Security and Medicare are both government benefits that help Americans in their retirement years. Social Security provides monthly monetary assistance while Medicare provides health insurance. Generally speaking, you can begin receiving these benefits at age 65. There are instances in which you can begin receiving benefits as early as age 62. But the benefits will be reduced to cover the longer period of time over which the benefits are paid. You can learn more about these government retirement benefits on the Social Security Administration website.
- Review Your Health Insurance Options
Medicare isn’t the only health insurance option in retirement. If your employer offers COBRA for temporary continuation of benefits, you could have up to 18 additional months of health insurance coverage after you end your employment. Some people may find this useful since your employer’s health insurance plan is likely more comprehensive than Medicare’s. In some instances, you can choose to enroll in a marketplace plan instead of Medicare. Some retirees do this because they’d have to pay a premium for Medicare anyway.
- Create a Retirement Budget
Creating a retirement budget is similar to creating a regular budget. The main difference is that you’re now accounting for retirement income (from investment accounts, Social Security, personal savings, etc.) rather than a paycheck. Your expenses may also look a lot different. Once you know how much will be coming in each month, you’ll want to list your fixed expenses. From there, you’ll want to list your variable expenses including things like spending on dining out or travel. Make sure you include healthcare costs and discretionary spending in your budget.
- Consider the Emotional Impact of Retirement
Something that shouldn’t be overlooked when it comes to preparing for retirement is the emotional impact it can have. The retirement lifestyle comes with a lot of lifestyle changes. Being prepared emotionally for these changes is just as important as being prepared financially.
One thing to consider is your marriage, if you’re married. You likely spent a large portion of your time away from your spouse due to working a day job. In retirement, how will you handle spending every day at home with your spouse? Another thing to consider is your career. For some, their careers define who they are. What will you do to get that same fulfillment once you’re not working anymore?
Retirement is a major milestone in life. Being prepared for retirement is very important, and the preparation starts now. When you start doing things like eliminating debt and saving money in retirement accounts earlier on in life, you’ll put yourself in a better place financially for retirement. Preparing for retirement isn’t strictly financial, however. You’ll also want to prepare yourself emotionally for the big transition.