Before you hang up your work boots and walk out the door, use this retirement planning checklist, prepared with help from Allianz Life, to make sure you haven’t left anything more important than ballpoint pens in your cubicle.
Start by scheduling an appointment with your human resources department. The person you talk to may have a list of topics she wants to cover, but don’t let her forget to answer all your questions about these four topics. It is also a good idea to get expert help from other sources as well.
Claim your old-fashioned defined benefit pension. If you’re lucky enough to have one of these, be sure you understand when and how you can claim benefits and how much you are entitled to. Most pension providers offer between four and 10 ways to take your pension. You’ll have to study these options and decide which is best for you. Don’t delay this review past age 65. Few pension plans offer any incentive for waiting to take the money until you are older than 65.
Pack up your 401(k). Don’t cash it out — that will leave you with an enormous tax bill. Do consider rolling it over into an IRA, so you can have more options to manage it than you’d have if you were limited to those offered by your 401(k) plan provider. You also might decide that putting part of your 401(k) in an annuity that will provide a steady check for as long as you live is a comforting idea. But before you do anything irrevocable, get some good financial advice. This chunk of retirement savings has to last you a long time.
Figure out who’s paying your health care. If you’re lucky enough to be offered retiree medical insurance, sign up for that first. In any case, if you’re 65 and old enough for Medicare but you’ve been covered by group health insurance, this coverage will likely end when you retire. After that, you’ll have an eight-month special enrollment period to sign up for Medicare Part B without penalty. If you’re not old enough for Medicare, then under most circumstances, you can continue to be covered by your employer’s health insurance by signing up for 18 months of COBRA, or the Consolidated Omnibus Budget Reconciliation Act.
Decide on a Social Security strategy. If you aren’t yet 66 and you claim Social Security in the year you retire, the wages you earn from a job may interfere with your Social Security benefit. Someone age 62 through 65 can earn up to $15,120 in 2013 with no effect on their benefit. After that your Social Security will be reduced by $1 for every $2 you earn. Retirees who turn 66 in 2013 are limited to earning $40,080. After that, $1 of every $3 of your Social Security benefit will be withheld. Figure out the impact of these rules before you start receiving benefits, or you could have a nasty surprise when Social Security demands that you repay any overpayment.