Retirement Planning

Preparing to enter retirement is more complex than the average person might think, so we’ve put together a list of financial calculators and eight essential topics to help you plan for a successful retirement. We believe history has shown that these activities are best conducted with the participation of your trusted Financial Advisor, Attorney, CPA, spouse, or other family members, as retirement is often a significant point of transition for the entire family.

1. Create Your Retirement Budget

Forward thinking is the key to a retirement budget. Be sure to consider how your lifestyle might change over the next 25-30 years and include every expense. The average retiree is more active than past generations and activities such as travel, hobbies and entertainment must be well thought out. Health care costs may significantly increase during mid- and late retirement, and financial responsibility for an elderly parent could be an additional consideration. Note that if you plan to move, a change in cost of living will also affect your retirement expenses.

2. Review Your Insurance Coverage

Make sure your life, health, homeowners, and auto insurance policy coverage is still applicable to your current stage in life. You may need to upgrade your life insurance to meet estate planning goals or your health insurance may not cover prescription medication any longer. Knowing what coverage you have and need ahead of time will save you from sleepless nights in the future.

3. Review Medicare Schedules

Medicare has two parts. Part A is hospital insurance and helps pay for hospital, hospice and home health care (in general, most people do not pay for this). Part B is medical insurance and helps pay for doctors, outpatient care, and other medical services (in general, most people do pay for this).

Depending on your age and whether or not you’re receiving or plan to receive Social Security, the Medicare application process, timelines, and premiums may vary. Note that applying late may result in delayed benefits and higher premiums. The resources listed can help you determine how and when you should apply for Medicare. You should also seriously consider long-term care or other additional insurance to supplement baseline Medicare coverage.

Don’t assume the government is going to be there to pay medical expenses. If you underestimate the significant health care costs you could be responsible for, you may discover that: (1) you won’t be able to afford the quality of care you desire, or (2) you’ll need to tap into savings reserved for other expenses.

4. Determine when Social Security Benefits begin

You’ll need to apply for Social Security three months prior to the month of your 65th birthday or three months before you wish to start collecting benefits. At the earliest, you may apply at 61 years and 9 months of age, although benefit reductions apply depending on your full retirement age (determined by year of birth) and personal situation. Contact the Social Security office to review your situation.

5. Implement a Retirement Income Plan

History has shown retirement incomes exceeding a 5% distribution rate of total retirement assets run a high risk of being depleted before the end of retirement. This is due to the impact of a long lifespan, inflation, taxes, market volatility, rate of return on retirement assets, health care costs, and your estate gifting plans. As was true when you were in the accumulation phase, it’s important to live below your means.

6. Pension Benefits and Retirement Distribution Options

You’ve probably heard someone in your family say “don’t put all your eggs in one basket”. You’ve probably followed this good advice your entire adult life and as a result you have investments in banks, Portable Pension Plans, 403bs, 401ks, Roth IRAs, Traditional IRAs, SEP IRAs, Money Market Accounts and many others. At Champion Wealth Management we can help you consolidate all of your investments into one statement and make sure your eggs are not kept in one basket. We’ll help you organize your accounts so your income goes in the bank on time and you don’t have to look at 5 different statements to make sure the deposits were made.

7. Review Wills, Trusts, Powers of Attorney, and Beneficiaries

Speak with an attorney to draft a Will or revise it if significant changes in your life have occurred. Trust are created to determine how assets will be distributed and to reduce estate taxes and other costs. Also, be aware that a "Power of Attorney" provides authority to the person named in the document to make financial decisions while you’re incapacitated and a "Durable Power of Attorney” provides authority to the person named in the document to make Health Care decisions if you are incapacitated. You will need both types of “Power of Attorney”.

8. Create an Emergency Fund

At Champion Wealth Management we recommend setting up an emergency fund to prepare for life’s unexpected twists and turns. An emergency fund is simply an account with enough money in it to cover six to twelve months worth of expenses. This account gives you an alternative to tapping into long term investments which typically give you the highest rates of return or taking out high interest rate loans which could cause you to slip further into debt.

Retirement calculators