Saturday, September 26, 2009

Planning Checklist for a Last Year before Retirement

You're in the home stretch now. You should be complete on everything listed in this article up to this point. The golf clubs are dusted off and you can almost taste that fancy drink with the little pink umbrella in it. But don't make the mistake of celebrating too early because you still have a few important details to tend to.

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Below are some final actions steps:

  • Get Organized: If you are like most people you have retirement accounts and savings scattered in various places. Find a service where you can consolidate your accounts and view them as just one source. Automate as many of your financial transactions as possible including routine bill paying and monthly deposits so that you have the flexibility to run your financial affairs on the road or in a foreign country. You want to simplify so that you are free during retirement to do as you please without being bogged down by disorganized financial problems.
  • Finalize Your Withdrawal Strategy: When the time comes to replace your paycheck by withdrawing assets where will the money come from? How much income will you need each month? What are your sources of income? If you are liquidating savings to fund current living expenses what accounts will you liquidate first and why? You want to have the answers to these questions before your paycheck ends.
  • Finalize Your Long-Term Care Insurance Strategy: Learn the facts about long-term care insurance and decide if and when it is appropriate for your retirement plan.
  • Complete Any Rollovers: Rolling over a workplace retirement plan to an individual retirement account can take anywhere from several weeks to a couple of months. If you are relying on that money you will have to begin the process well in advance of when you need to make your first withdrawal.
  • Set up an Emergency Fund: Yes, having an emergency backup is a smart thing to do if you haven't already done so. After retirement, large expenses (such as a medical emergency) can and do arise when we least expect it. How large should your fund be? To be on the safe side, we recommend an amount equal to at least 3 months of your expenses, but preferably 6 months. Keep your fund in liquid assets (such as a checking account, savings account, or money market fund) that you can cash in at any time without a penalty.
  • Update your estate plans: Make sure your will, both powers of attorney (one for financial affairs, the other for health care), and your living will are up-to-date. Also check your beneficiary designations — will the wrong people inherit your money? Don't put this off until you get sick — accidents do happen at the most inconvenient time — don't let a crazy driver make a mess of your plans.
  • Give Notice to Your Employer: Find out from your employer what is required to begin receiving the benefits your have earned and to end employment. Most employers appreciate receiving more than two weeks notice. Determine the timelines and complete the required paperwork.
  • Attend a pre-retirement counseling seminar: Get all the information needed to be fully prepared for your coming life changes from legal, financial, and other perspectives.
  • Review your Official Personal Folder for all details: If you are a Federal employee, make an appointment with your personnel officer to review your Official Personnel Folder (OPF) or its equivalent to make sure all your records are complete and accurate, all service is verified, and your insurance coverage is documented.
  • Apply for Social Security benefits: You need to apply for Social Security benefits 3 months before you want your retirement payments to begin. If you will be filing for pension and Social Security benefits get the paperwork prepared and finalize any last minute questions. Do not wait until the last minute or you could be throwing away some benefits. Consider requesting direct deposit to reduce your paperwork while also eliminating delays in processing checks while away from home traveling.
  • Apply for Medicare: You're eligible for Medicare starting on the first day of the month you turn 65. Apply at your local Social Security office or online at  The date you apply for Medicare may or may not coincide with the date you apply for Social Security retirement benefits. Sign up for Medicare 3 months before reaching age 65, even if you plan to continue working past age 65. If you don't, your Part B coverage could be delayed and you could have a higher premium.
  • Apply for Medicare Supplement (Medigap) Insurance: The best time to buy a supplemental policy is during the first 6 months after you enroll in Medicare Part B. That is the only time insurers are required to accept you, regardless of your preexisting health conditions.
  • Finalize Health Insurance Coverage: Get up to date quotes for any supplemental coverage to Medicare or transitional coverage until Medicare kicks in. Complete and file the applications once you have decided the plan that best fits your needs.

Sources and Additional Information:


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