If you’re on the cusp of retirement, it’s important to have your finances in order and make a plan for the next portion of your life. It’s essential to plan your transition from the working world into days of freedom; many new retirees find this life change is a bit more taxing both emotionally and financially. There are a variety of questions to consider before you reach that fateful final day of work, so consider the following money moves and keep yourself and your loved ones in the best financial position even once you’ve left the work world.
Create a New Budget
Before you leave the work world, you’ll need to take a look at your budget. You may assume you’ll spend less after retiring, but it often is the opposite. Map out your expected expenses for the first year after retirement, look at your expected income, and consider the difference between the two. Keeping records of all of your expenses is essential, especially when it comes time for tax season.
Get Out of Debt
If you’re in debt, do everything you can to get yourself out of it before making the retirement leap. Whether you have mortgage payments, credit card bills, or student loans for your college student, funnel all the money you can into getting these accounts off of your plate. If you’re in debt with the IRS, it’s even more important to work out a plan as quickly as possible to avoid tax levies and the like. Speak with a financial advisor from a company like Edelman Financial if this is the case to ensure you’re working with the government agency and avoid further consequences.
Many retirees struggle to determine whether and when to enroll in Medicare—the confusing enrollment dates don’t make it much easier. There’s a few Medicare basics that you should know while trying to decide whether you need to enroll. Medicare Part A is designated for hospitalization; if you’ve worked the right amount of years and paid Medicare taxes, your coverage will be free. Medicare Part B includes services considered medically necessary, like doctor visits. If you sign up for Social Security benefits before you hit 65, you’ll automatically receive both parts A and B.
When Should You Take Social Security?
Many soon-to-retire individuals find it hard to settle on when they’re going to start taking Social Security, and if you’re married, this question can get even more convoluted. There are huge benefits when you can delay these benefits until you’ve reached retirement age, which can range between 65 and 67, depending on when you were born. If your position is forcing you to retire earlier than you might have intended, you might find yourself taking Social Security benefits when you’re only 62. If you or your spouse has reached full retirement age, you might decide to file for benefits and then suspend your payments. Keep in mind that you must apply to receive Social Security benefits at least three months before you wish to start receiving them. Medicare Part C is also known as a Medicare Advantage plan, through which you receive health services with a preferred provider organization. Medicare Part D is a prescription drug benefit program. You can enroll for the last two parts three months before you turn 65, up until three months after you turn 65, but there are exceptions to these.
Senior Life Insurance
No one likes to think about it, but it’s one of life’s inevitabilities. We all pass on at one point or another, and it’s in the best interest of your loved ones to work out a plan long before that day comes. If you don’t already have a life insurance policy, consider the bills your family will be left with when it comes time for memorial services and burial. The average funeral in North America can cost upwards of $10,000, so it’s definitely worth it to consider senior life insurance, especially as you age. This will help deal with any expenses that may come along with your illness or death, and leave your family in a much better position.