Retirement Decision Points
November 5, 2016
Understanding Vital Decision Points for Retirement
In advance of retirement, it is vital to understand its critical decision points, and that you are prepared to make the right decisions at the right time. This does not mean that you need to make those decisions tomorrow or even a year from now. But you should be aware of them and their particular timelines, so you are ready when the time is right.
Such preparation is critical, no matter your retirement age. But for people who want to retire early and shift their lifestyles sooner, understanding these decisions is especially important.
The longer you work, the more resources you should have for retirement (and the fewer years you will be paying for retirement). Many people are disinclined to stop working, and not only for the income: after working for decades, work provides an important sense purpose and identity.
Keep in mind that you can start planning for retirement in-advance of retiring. This means where you might live, what you might do (including new work), and what annual resources you will need. Such planning is especially helpful in cases of unexpected developments, like health concerns for you or your spouse, or employment transitions.
Where to Live
This is one of the most important decisions that retirees face. Where and how you live will play a central role in your lifestyle and your financial position. Retirement is your chance to realize your ideal day-to-day lifestyle and activities.
Before making the retirement shift, investigate your living options. 55 and over communities in Delaware offer some exceptional advantages, with great lifestyle options, great communities, close proximity and easy access to cities and urban resources, and favorable tax treatment for retirees.
Also keep in mind that you do not need to be retired to move to one of these communities. Making the move sooner might help relieve future stress.
Making Financial Decisions
Retirement financial decisions are obviously critical for enjoying retirement. Two of the biggest decisions are when to sign up for Social Security, and how much to withdraw from your retirement accounts.
Social Security: You will get the most from Social Security if you delay the start of this benefit. While you are eligible from the age of 62 it is better to start this benefit at 66 or, if you can, 70. The longer you wait, the higher the income benefit.
Retirement Accounts: You can start withdrawing money without penalty from retirement accounts from the age of 59.5, and are required to start taking distributions by 70.5. Keep in mind that tax is due on this income, but your tax rate will depend on your total income. Be careful to plan your tax exposure, as well as your annual distributions, since retirement accounts need to last you across retirement.
Medicare: Make sure you set up Medicare benefits before retiring from work. Medicare will start when you start taking Social Security (by age 65).
If you start Medicare after 65, be sure to sign up for it during the seven-month eligibility period around your 65th birthday (three months before you turn 65, the month of your birthday, and the three months following). If you are still working beyond 65 and receive health coverage through work, you can enroll in Medicare during the eight months after this coverage ends. But be sure to enroll on time to avoid penalties.