Life Transitions Part 1: Ladies Who Retire
Retirement sometimes comes out of nowhere, and sometimes it comes along very, very slowly. Maybe you are going kicking and screaming or you are counting down the days, but are 10 years away still. I’ve seen both, and both can be an overwhelming time. You might think once you get a few questions answered, you can have the retirement you’ve worked so hard for. But the reality is, there are so many moving parts to retirement along with so many ages and dates to remember. Once you know when you can and want to retire, the floodgates will open with hundreds and thousands of questions and concerns.
Sorry didn’t want to make it even more daunting of a transition, but it is a major life event you are planning for. You’ve received a paycheck for most of your life, and now you aren’t going to be on the receiving end of one. That in itself is a huge concept to process. You will go from having a purpose to your day to having to create a purpose day after day. If you are able to leave work on your own note, then you have time to prepare yourself for this idea. However, if you leave work from a job cut or for health, you might not be as lucky. Don’t worry, take time to really find out what you want to do with your life. It might take you a few months or even a few years, but one day it will hit you. It might be a compilation of hobbies, volunteer work, family help, and your own health. My recommendation from helping other women in retirement is to not say NO right off the bat. Try it out for a bit, don’t worry if it doesn’t work out. Remember, “Every day in retirement is like a Saturday” as our one client always says.
With this posting, I’ve decided to put together two different checklists, one for your money and one for your lifestyle in retirement.
So here is what to think about as you come up to retirement as well as in retirement for your money and finances:
- 401(k)/403(b)/IRAs/Roth IRAs:
- When can you withdrawal without a 10% penalty?
- How will the withdrawal be taxed?
- Should you leave your plan at work or roll it over?
- How much does your current plan cost you in fees?, and
- How much can I withdrawal each year without depleting the account? AKA what is this 4% rule I hear about?
- Company stock: you typically have 30-90 days to exercise your company stock options.
- Think about how the stock market is performing and
- How the company itself is doing.
- Social security:
- Benefits of starting social security prior to full retirement age, at full retirement age, or post full retirement age.
- Your overall health and life expectancy,
- If you will continue to work or not, your benefits may be reduced,
- How your benefit will be taxed, and
- What your spouse’s benefit will be, (for survival benefits, you will be able to keep the higher of the two benefits)
- If you are one of the lucky few with a pension, when should you start it?
- What option should you take? Some plans have over 30 options!
- What do life only, 10 year certain, and life bump up mean?
- Health Care:
- Are you eligible for any health care benefits in retirement from work,
- If you retire before age 65, how much will private insurance cost you?
- Check with Human Resources if you have any options.
- What are the penalties for not enrolling when you are eligible?
- Should I get a supplemental or Medigap policy?
- What will it cost me each month?
These are just six areas of retirement to start thinking about. Remember the process only starts when you decide when to retire, and once all these questions are answered, trust me, you will have many more pop up! An example is what the heck is the exit tax for New Jersey? Guess what it isn’t a penalty for leaving like everyone thinks. You really shouldn’t go into retirement blindly with your money or with your life. Get a partner to help you navigate all these questions and the other ones that come up along the way. If you worked so hard for 30 plus years to finally retire, shouldn’t you put a little planning into how it will all work together? The social security question alone is over a million dollar question, so don’t just do what your neighbor has done or what your family tells you to do. Take some time to really understand your options before making a decision. Oh by the way, some of these questions don’t allow a do over. I think you owe it to yourself to get a plan in place, and to have someone there when a bump (or enormous boulder) in the road comes up. I’m just saying….
For Part 2 of Ladies Who Retire, come back next week when I will go through the Retirement Lifestyle Checklist and the Top 5 Concerns from the women who took my Ladies Who Retire Survey.
Jessica Weaver, CFP®, CDFA™, CFS®
Any opinions are those of Jessica Weaver and not necessarily those of RJFS or Raymond James. Raymond James does not offer tax advice or services. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Be sure to consider all of your available options and the applicable fees and features of each option before moving your retirement assets.