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5 Tips to Follow For Retirement Planning in 2014

Follow these steps while planning for the coming year


If your life-after-work is set to begin in 2014, no doubt you’re excited – and perhaps a bit anxious. You want to make sure you have all of the bases covered and haven’t overlooked an important issue to be considered. Here are five tips to help in your countdown to retirement for 2014.

Wrapping up loose ends at work

Retirement means more than leaving your work friends behind. There are loose ends to tie up well before you say, “so long.” If you are lucky enough to have a pension plan sponsored by your employer you will need to determine the date and method of your pension payout.

If you have participated in an employer-sponsored 401(k), you will most likely want to roll it over to an IRA. Of course, you can leave your investments in your 401(k), but many retirees find they have more investment flexibility, and sometimes even lower costs, when moving the assets to a rollover IRA. You can look brokers offering no fee IRAs by opening accounts with companies like TD Ameritrade (AMTD) and OptionsExpress.

It’s quite likely that many, if not all, of your investments held in the 401(k) won’t rollover “in-kind” (just as they are) to an IRA. 401(k)s often hold special “share classes” of mutual funds that can’t be held in an IRA.  Discuss your options with a trusted financial advisor before making any moves. You may end up rolling over cash to your IRA and reinvesting it, but don’t worry – it won’t trigger any taxable event until you begin making IRA withdrawals; rollovers are tax free.

Review your retirement assets

Your retirement plan assets have most likely been invested for long-term growth during your working years. Now that you are retiring, you’ll want to consider changing your investment lineup to generate income, as well.

First, you’ll want to sit down and develop a budget for your retirement living expenses. Your investment advisor can also help with this, as well as determine how much regular income your portfolio can generate – and a “safe” withdrawal rate that will help ensure your investment assets last through retirement.

Don’t miss your Medicare deadline

Regardless of your age when you retire from work, it is recommended that you sign up for Medicare three months before your 65th birthday. Of course, Medicare won’t cover all medical expenses, so you will want to consider supplemental programs (MediGap) from private insurers, as well.

By the way, you can sign up for Medicare even if you plan to continue working past age 65.

Remember to sign up for Social Security

Now you’ll want to consider when to begin drawing Social Security benefits. Your “full retirement age” – when you are eligible for full benefits — can vary depending on your birth date, but you can qualify to draw reduced benefits as early as age 62. In some cases the month in which you retire can impact the amount of your benefit payments. The Social Security Administration has a retirement calculator that can help guide you through the planning process.

NerdWallet Inside Tip: If you plan on continuing to work beyond your full retirement age as Social Security defines it, you may actually increase your future Social Security benefits.

Life and Health Insurance

Very few private employers offer continuing insurance benefits to their retirees. If you retire before age 65, you may want to consider extending your health insurance through COBRA benefits, though you will have to pay the full cost.

Most likely, you will be paying a visit to the well-publicized Obamacare insurance exchanges at the Health Insurance Marketplace but before you get too deep in the process, get a head start with some online resources like NerdWallet’s recommendations for the best health insurance coverage.

You will also want to ask your insurance agent how your health insurance plan coordinates with Medicare benefits, if you are 65 or older. And finally, just prior to retirement is a good time to review your life insurance needs and in-force policies.

Written by Hal M. Bundrick

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