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You will likely create numerous retirement budgets using estimates during your working years; however, those estimates may have changed drastically by the time you are close to retiring. When you are within five years of retiring, start working with that budget on a yearly basis. When you are a year away from retiring, do a final budget.
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Throughout your working years, your retirement plan and your estate plan may have been separate plans. As you near retirement age, however, those two plans should be merged to ensure that they work in harmony with one another. It is common, for example, to make significant changes to your asset structure when you enter retirement. That, in turn, should trigger a corresponding change to your estate plan.
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From a personal or emotional standpoint, you may be very attached to where you already live. Then again, that attachment may begin to disappear as you near retirement age and realize what it will cost to remain where you are. If you will be living on a tight fixed income during your retirement years, it may be time to consider moving somewhere where the cost of living is a bit more favorable. Of course, your quality of life in a location is also important. Because both the cost of living and the quality of life in a city can change dramatically over time, it is best to revisit this topic shortly before you plan to retire to make sure you are making the best choice.
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Ideally, you should spend a significant amount of time in a potential area outside the U.S. if you are considering moving there after you retire. Another way to research retirement locations abroad, however, is by using the Global Retirement Index. The GRI is published each year by International Living magazine and ranks each country included in the list in 13 categories, including things such as cost of living, healthcare, and visas and residence.
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Do you know exactly how much you will receive in Social Security retirement benefits when you retire? Most people don’t. More importantly, the amount you receive will depend, to some extent, on your age when you begin collecting those benefits. The government makes you wait until "full retirement age" to start collecting the full retirement payout that you've earned. Full retirement age used to be 65, but Congress voted in 1983 to raise it to 67 for everyone born in 1960 or later. You can start collecting as early as age 62; however, your monthly benefit will be reduced. Conversely, your benefits payment goes up 8 percent for every year after full retirement age that you delay collecting payments, up to age 70. To get a better idea of how much your retirement benefits will be, navigate to the Retirement Estimator on the SSA website.
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When and how you take distributions from a retirement plan can directly impact how that money is taxed by the IRS. Therefore, knowing some basic retirement plan distribution rules is essential. You should consult with your estate planning attorney and/or financial advisor to make sure you understand the rules for your plan; however, the general IRS states that unless you elect otherwise, benefits under a qualified plan must begin within 60 days after the close of the latest plan year in which you:
- turn 65 (or the plan’s normal retirement age, if earlier) OR
- complete 10 years of plan participation OR
- terminate service with the employer.
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Yes. This should be included in every retirement plan. A 65-year-old entering retirement today already stands a 50-70 percent chance of needing some type of LTC before the end of his/her life. Those odds increase with each passing year and are shared by your spouse if you are married. Neither Medicare nor most private health insurance policies cover LTC expenses; however, Medicaid will cover LTC expenses if you qualify for benefits. At an average annual cost of over $100,000 nationwide, over half of all seniors turn to Medicaid for help paying for LTC. Unless you can afford to pay for LTC out of pocket, Medicaid planning should be part of your estate plan before you enter your retirement years.
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Contact Us
For more information, contact a Phoenix estate planning lawyer at Morris Hall PLLC by calling 888-222-1328 to schedule your appointment today.
