Personal Finance When You’re About to Retire

Personal Finance When You’re About to Retire

Here are five steps you need to take before you retire.


The first step is to go on and access your Social Security record. Take a look and make sure the information on your employment history is correct well before you apply for Social Security, because the amount of benefit you receive is determined by your employment history.

Next, make use of the calculators on the website, or talk to your financial adviser, to determine when you should start taking Social Security. A lot of people start at age 62 simply because it’s available, but that’s not always the best strategy. The longer you postpone taking Social Security, the more the benefit grows, up to eight percent a year more until it maxes out at age 70. This is important, because once you start getting Social Security, your payment does not increase other than periodic cost of living adjustments.


Most people don’t think about long-term nursing or medical care until it ’s needed, and then it’s too late. I always recommend that people preparing for retirement put something in place to cover long-term medical care while they are still working.

Traditional long-term care insurance is one approach, but I prefer using vehicles that solve multiple problems. For example, a number of permanent life insurance policies offer a long-term care rider. Ultimately, the right choice is based upon what particular need is most important to the client and what they can afford to set aside for it. Hybrid insurance, for example, requires a large lump-sum payment to work most efficiently.

Medicaid should always be the absolute last-resort option, because there are stringent spend down requirements and the choice of facilities is so limited. Think of Medicaid as what you end up with if you don’t plan properly.


There’s this myth that you don’t need life insurance in retirement, but I think it’s critical to have life insurance when you’re retired. At a minimum, you want to cover the reduction in Social Security benefits if a spouse passes away. Burial expenses can be another issue. Some permanent life insurance also offers benefits you can take advantage of while you are alive, such as coverage if you have a chronic illness or an accelerated death benefit if you are diagnosed with a fatal illness with less than a year to live. Some also accumulate cash value that can provide a retirement income stream. Optimally, life insurance can enable you to spend down your assets more aggressively, while still leaving a legacy to heirs.

You’ll also want to put life insurance in place before you retire and lose any employer-paid insurance benefits you have.


When you turn 64, make sure that you understand your Medicare options, as there can be penalties if you don’t apply in a timely manner. There are insurance brokers that can help you make the right choices for your Medicare supplemental insurance options. Most people will want to apply for Medicare around three months before or after turning 65, but that is not right for everyone. Your circumstances will dictate what is right for you.


Creating a retirement income plan is absolutely the most important step in preparing for retirement, and yet is something that most people overlook. First, you need to understand what your expenses are going to be, and then you need to add in a buffer for the unexpected, whether it’s inflation or emergencies. Travel and healthcare expenses should also be included in your income planning.

You also need a strategy for how to spend your assets. There are plenty of hidden snares here to trip the unwary. For example, Medicare Part B premiums are based on a two-year look-back on your income. More importantly, there may be tax implications of how you monetize your assets, and it is especially critical not to run out of money. A retirement income plan should take you all the way from the current year through death.

This isn’t a one and done task. Reviewing your retirement income strategy is something you need to do annually, making adjustments according to market performance, your expenses, and your tax situation. Every year is different.

With these five steps, you can set yourself off in retirement on the right foot.

Have You Saved Enough For Retirement?

Life insurance policies are subject to eligibility requirements and restrictions, and may not be right for everyone. Accessing cash value will reduce the death benefit and policy values, and may be taxable. Some of the life insurance benefits described in this article may require additional riders and may be subject to additional costs.



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