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The good news about retirement is that advances in science, technology, and living standards have led to longer life expectancies. This means that you can expect longer retirement years than previous estimates indicated. This allows for more time with family and friends and time to achieve those lifelong aspirations.
You should remember to include your family in your planning. It is important that they know your wishes, especially in regard to topics such as long-term care. They will also be a great resource for further information and, more important, of support.
By planning, you may avoid some of the pitfalls that many retirees of today face, and you will have a greater probability of a comfortable retirement.
- The normal retirement age is 65, but a pension can be drawn earlier with or without reductions based on a variety of criteria. Please visit the Pension BenefitTabs™ (Vesting, Normal Retirement, Reduced/Unreduced Retirement, Rule of 85) to understand how the combination of your age and vesting affects the amount of pension you can receive at your desired retirement age.
- The retirement process includes a lot of paperwork and decisions for you to make. The best place to review the entire process is the “Retiree Information Pamphlet”. You can download this off the forms section on this page and print it out or read it online.
- Retiree Health Plan coverage is available if you are over age 55 and meet all the other requirements. Please review the “Eligibility for Retired Participant” in the forms section on this page for a complete discussion of the eligibility requirements. You can also look at the Retiree Rules BenefitTab for an online summary of the rules and benefits.
- If you plan to return to work in the industry on either a part or full-time basis, be sure to review the rules starting with the Life Event titled Return to Work After Retirement. Both Pension and Welfare benefits can be affected by any such work.
One of the greatest risks for you as a person retiring today is considered to be the danger that you may outlive your assets. This is because of several factors: inflation, increased longevity, hyperinflation of medical expenses, and the costs of long term care if you survive into your 80’s and 90’s. Unlike Social Security, your pension benefits from the Trust do not increase with inflation. So, you need to carefully determine how long you can financially support your desired lifestyle in retirement. You may want to get professional assistance in making this determination from someone like a Certified Financial Planner or other financial professional.
As you make withdrawals from your retirement savings, carefully plan to do so in a way that minimizes your taxes. Withdrawals from tax-advantaged accounts (401/IRA, SEP, KEOUGH, etc.) may be arranged so that they take advantage of continued tax free build up. Withdrawals are generally taxable events, and it is usually best to delay and minimize such withdrawals as much as possible.
Periodically review how your assets are allocated between various categories such as stocks, bonds, real estate and savings accounts. Studies have shown that investors have a “short memory” and invest as if the economy of the last 1-3 years will continue into the indefinite future. But in fact, the last few years have had unusually bad returns in the stock market while inflation has continued to be moderate (except in health care costs). Since it is likely that both inflation rates and investment returns will vary considerably over the course of your retirement, it pays to have the assets which are under control diversified in a prudent way. Don’t put all your eggs in one basket, and don’t assume that inflation will remain moderate forever.
Make sure you understand the health care benefits currently offered by your and your spouse’s plans. Be aware that benefits under this plan are not vested and could, under certain circumstances be reduced, changed or even eliminated. The years just prior to Medicare eligibility are generally the most expensive for private health insurance.
Coordinate the receipt of your Social Security with your plans for any work after retirement and other sources of income. The assistance of a financial professional may help you to figure the optimal time to begin taking Social Security given your individual circumstances. Note that the age at which you can draw unreduced social security ranges from age 65 to age 67 based on your date of birth.
As you plan how you will spend your time in retirement, consider part-time work and volunteer work, but be aware of the rules affecting your pension if you return to work in covered employment. Part time work can be very helpful in preserving your retirement assets.
Financial planners recommend that if you have not already done so, that at retirement you should update a number of personal plans and documents. Here is a checklist of some items which you may need to update, revise, or consider:
- Living Trust
- Estate Plan
- Durable Powers of Attorney
- Designation of Beneficiary: IRA, 401k, Life Insurance
- Adequacy of Life Insurance
- Social Security
The Social Security homepage offers education on how your retirement benefits are figured, how social security may change in the future, how it’s financed, and other basic facts and figures. Check this site on how to apply for your benefits, how to appeal these benefits, and everything else regarding social security.
- Edelman Financial Center
The Edelman Financial Center provides advice on retirement planning. Articles address how to roll over accounts, how to avoid paying penalties, retiring at a young age, and more. Links to a financial calculator, books and tapes by Ric Edelman, and other websites.
- Nolo Retirement
Information on retirement plans, benefits, estate planning, and long-term healthcare. There is also a section on the personal concerns of retirement.