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Special Concerns in Financial Planning Near Retirement
In the final years before you retirement-plan'>retire you are in a good position to make some last minute changes that can have remarkable effects upon the lifestyle you will lead after you have ceased to work. These are the years in which you can ensure that you have hit “your number” or the total dollar amount you have anticipated seeing you through to the end of your life. It is also the time when you will be able to accurately project if your established income streams will deliver the amounts needed, and if you will be able to retire at your target date or if you will need to either continue working or take a part-time job after retirement.
When looking at your financial planning near retirement pay close attention to the following:
Are you maximizing your savings? Even in a three to five year span an individual about to retire can increase their total savings by optimizing their 401k, adding larger sums to their IRA and reducing their overall expenses to direct more funds into savings accounts.
Have you scrutinized your insurance and benefits? It is vitally important to know the exact amounts that will be covered by social security and Medicare benefits. Each person’s coverage varies and it is best to head directly to the Social Security Administration for the exact amounts you can expect. This can be done in person or via the Internet.
Enhance your insurance coverage when necessary. A good financial plan is going to allow for medical issues, which may mean supplementary insurance. Insurance, however, might also mean long term care coverage, life insurance or even disability if you find you will need to carry a part time job to make ends meet.
What about your folks? When we think about retirement, even as it quickly approaches, we often forget that our parents or our in-laws may be relying upon us for care. This can take both an emotional and financial toll, and some planning should be made for addressing the possibility of such a situation.
Have you thought about taxes? Just because you are no longer working does not mean you will not be dealing with taxation. Any good financial planning should include tax dollars or bills. Additionally, most good retirement plans also have built in methods of reducing tax liabilities such as charitable donations or the utilization of tax exempt funds before any use of those which come with tax liability.