2018 Retirement Checklist.

[Meme]

A longtime lurker, first time poster. Appreciate all I have learned from reading the posts. And how kind and helpful the posters are to each other.

We are working on joining the retirement class of 2018. I am looking for some advice on creating our retirement readiness checklist and to really determine if we’re in a good position to stop working.

Some information about us, we will both be 64 by August of this year.

Our family income is about $150,000 /year and I have tracked our expenses for the past 2 years and need somewhere in the area of $125,000 per year to continue our current standard of living. This takes into account our COBRA premiums until we are eligible for Medicare. Also covers our taxes both income and property.

We have about $1.8 M in retirement accounts – 401k, 403b, IRA’s including Roth. $430,000 in taxable accounts. Home with no mortgage valued at about $600K.

I expect to collect SS at 66 of about $23k per year. Husband will wait until age 70 to collect $45k per year. I have based this information on our actual SS statements based on our earnings. His pension will begin at age 65 and is about $20K per year with a right of 100% survivorship for me.

To cover our expenses until the pension/social security begin, we were thinking of using a combination of both our retirement accounts and our taxable accounts. We would hope to withdraw about 3% from the retirement accounts and the balance from the taxable accounts.

What else should I be concerned about? Thank you for your advice – we’re looking forward to the next chapter in our lives which will include more travel.

[Sandi_k]

- Make sure all medical consults are done.

- Get any dental work - needed or voluntary - done.

- Any major home improvements?

- HELOC while you still have earned income?

- Replace any aging cars while you still have earned income?

- All wills, trusts, durable POAs, legal consults done?

[jojay]

Ditto on the medical. Ask your dentist to max out any work that is needed to take advantage of coverage. Glasses if you have vision coverage.
Max out any retirement contributions in order to reduce income AND assure company match to the max.
Good luck and congratulations!!

[Pajamas]

If you need any elective or semi-elective surgery, consider having it while you are still working so as to be able to use accumulated sick leave.

Consider retirement account contributions when setting an end date for your employment. If you work just a couple of months into a year, you might be able to max out your contributions for the entire year.

Look at when your company-provided health care coverage ends when planning the date. It may end almost immediately or go through the end of the month. Working to the 1st instead of the 31st might save a month's premium.

Don't forget about bonuses. It would be sad to miss that by a couple of weeks.

If you have flexible spending accounts, you might need to spend that money before you end employment rather than the end of the year. I'm not sure if that is universal or plan-specific.

If you have any benefits like legal assistance, take advantage of them if you need them.

If you convert a 401(k) or 403(b) or similar to an IRA, you may need signatures from someone in HR and it may be easier to do that while you are still working there instead of having to make a trip back to the office just to do that.

[TravelforFun]

I expect to collect SS at 66 of about $23k per year. Husband will wait until age 70 to collect $45k per year. I have based this information on our actual SS statements based on our earnings.

Have you looked into you collecting earlier than 66 so your husband can collect spousal benefits at age 66 and receive $11.5K a year until he turns 70 when he claims his own benefits and receives $45K a year?

TravelforFun

[Chip]

Have you looked into you collecting earlier than 66 so your husband can collect spousal benefits at age 66 and receive $11.5K a year until he turns 70 when he claims his own benefits and receives $45K a year?

This isn't an option for the OP. Since they both turn 64 in August that means they were born in 8/54. The restricted filing you are suggesting is only available to those born before 1/2/54.

[snowox]

Is it save to say you have something planned that you are retiring to? While the financial aspects and getting things in order are important, so is going into retirement with a plan for good mental health. Retirement came quickly since I was self employed and was just DONE but the transition took me probably a bit longer because I didnt think that part out. Now all is great but for you two what are your plans? So think about that alot if you havent already

[TravelforFun]

Have you looked into you collecting earlier than 66 so your husband can collect spousal benefits at age 66 and receive $11.5K a year until he turns 70 when he claims his own benefits and receives $45K a year?

This isn't an option for the OP. Since they both turn 64 in August that means they were born in 8/54. The restricted filing you are suggesting is only available to those born before 1/2/54.

Good. I didn’t see their ages in the OP’s original post. Those must have come out on subsequent posts.

TravelforFun

[WoodSpinner]

OP,

Congrats—I just retired in December and faced many similar questions.

You might find this Retirement Policy Statement thread helpful.

Let me know if you are interested in more details or other aspects. I also found a well thought out:

• Invesrment Policy Statement

• Deterministic and Probabalistic Cash Flow Models

• Decision Tracker

• To Do List

Were all very valuable.

Wish you the best!

WoodSpinner

[busdriver]

His pension will begin at age 65 and is about $20K per year with a right of 100% survivorship for me.

I too will be retiring near the end of this year and was planning on drawing on my pension at 65 until a co-worker advised me to get an estimate of benefits for waiting until 70. It was nearly double, so my revised plan is to hold-off on the pension until 70 and utilize funds from 401K & IRA from 65-70. You might have him check to see if the same might be true for his pension.

[tennisplyr]

From a non-financial perspective, you will tons more free time which many find a huge challenge. It would be helpful to have passions, hobbies, etc to enjoy. Good luck!

[Meme]

Thanks to everyone for your replies! It is greatly appreciated.

We do have a home equity line have not used it in a number of years & will need to confirm that it is still active.

We expect to sell our home within the next 2 years- we have very high property taxes & will need to spend some money on getting the house ready to sell - in the range of $20k & we'll use funds from our taxable accounts for those improvements.

We'll replace my husband's 8 year old car this year with a new to him car, we'll pay cash out of our taxable accounts.

Will in place, no trusts- why would we need a trust?

We will max out 401k for my husband, 403b for me & Roth for both of us.

No work bonus for me & my husband receives his bonus in March. So we are good on that point.

Woodspinner- will begin work on our Retirement Policy Statement this weekend- good to have all of this information in 1 place. I like the idea of a to do list along with a decision tracker.

A lot of changes in our future- not sure where we will live-we are in New York, our children live in Chicago & Boston- we love to travel & we hope to enjoy more travel during our retirement.

Any thoughts about our withdrawal plans from our taxable & retirement plans?

Again - thanks for all the great input & advice.

Cheers!

[Lynette]

Have you developed a spreadsheet that models your taxes over a period of time until you have to start to take RMDs? I've been retired for a year and underestimated the amount of time it would take including some nasty surprises such as Medicare IRMAA. You might want to look seriously at Roth conversions if you will be in a lower tax bracket now than when you start to collect Social Security. You might also want to become familiar with strategies such as DAFs and QCDs. Try to understand taxes as best as you can. I actually downloaded the 1040 with schedules and instructions and did my taxes manually. I also bought Turbo Tax so that I could really understand it. I have an accountant do my taxes but I learnt a great deal in this way.

Are you familiar with Medicare? As you are close to the age where you are eligible for it, maybe it will be worth you time to explore options. I found it extremely complicated and expensive after my excellent megacorp's health care plan. I only had to sign up once each year and that was all. Now there are so many moving parts. Premiums for Medicare B and D, Supplemental plans to be considered, drug plan choices.

I also think you are wise not moving immediately. I decided I was going to move to be closer to family but after six months of getting my house ready to sell, I changed my mind. If you really want to move, it will also take time to decide where you want to live. This is a massive undertaking. I'm pleased I had the same address and phone number for all of the issues I faced with Medicare, pensions, etc. etc.

If you are planning to relocate, you may want to consider a supplemental plan that is available across different states. This is why I chose AARP Medigap F and a Humana Drug Plan. I've changed from Medigap F to G. You can read many threads on this website as to why G is recommended instead of F.

[Miriam2]

Our wiki has a checklist of important retirement dates.

Checklist of Important Retirement Dates

[RetiredMule]

Thanks to everyone for your replies! It is greatly appreciated.
...
Will in place, no trusts- why would we need a trust?

...
A lot of changes in our future- not sure where we will live-we are in New York, our children live in Chicago & Boston- we love to travel & we hope to enjoy more travel during our retirement.

Any thoughts about our withdrawal plans from our taxable & retirement plans?

Again - thanks for all the great input & advice.

Cheers!

Congrats from a fellow travel-crazy guy!

On the question of the need for a trust: If you haven't already done so, you may want to look up probate court/estate planning related things that are applicable for your current state of residence and decide on this - I'm not by any means an expert (frankly, I know very little); there are many knowledgeable people on this topic in this forum.

On withdrawal plans: as Lynette (and maybe others) pointed out, need to consider (and model) tax scenarios in retirement, esp. when your RMDs start you don't get to make much choices on that front.

tax implications/other factors to be considered for this as well I personally lean towards living off of taxable accounts and deferring withdrawals from retirement plans as much as possible, and doing Roth conversions to the extent I can on the tax-deferred IRAs. I also lean towards taking SS (Soc Sec) at the earliest; my logic for that is:- SS isn't "inheritable" for any purpose - for children/charity/what have you - while taxable and tax-deferred accounts are "inheritable" by anyone we designate as beneficiaries. I know it depends a LOT on other factors - including the "guaranteed income" nature of SS vs. other sources - for others on this very specific SS early vs. @70 topic.


Lastly, on travel: if you move, may help to choose a place/city that is closer to a major airline hub

All the best!

RetiredMule

[Watty]

A few sort of random things.

1) At many, but not all, companies your health insurance continues through the last day of the month when you terminate your job. Making the 1st day of the month you last day of work instead of the 31st can save you a months COBRA costs.

2) If you have a flexible spending healthcare account then you do not need to repay advance payments on it. For example if you put $100 a month into a FSA and have a $1,200 dental bill in January that is not covered by other insurance then they will reimburse you for the $1,200. If you leave at the end of January then you do not need to pay back the extra $1,100. If you leave the job before you use up your FSA contributions you may not get to use them.

3) When I was on COBRA I could keep my dental and vision too for a small extra cost. I don't know if all companies allow that.

4) When you go on COBRA you have to be aggressive about checking that your premiums are paid and watch them closely so they don't have any cause to drop you. My COBRA was handled by an outside company and they did the bare minimum that they legally could to allow me to make my payments. It was clear that they would have loved to drop the insurance for a couple in their 60's. I always prepaid my COBRA premium long before the due date but they "accidentally" cancelled my coverage twice.

5) Next fall if you are on COBRA you will go through an open enrollment period and your insurance can change, just like when you were working. Watch out for that paperwork. Try to keep in touch with your former coworkers since they will get the open enrollment information long before you do.

6) Watch out when the first of your turns 65, you will likely have to call about the COBRA coverage then and it may automatically end at 65 so be sure to get signed up for Medicare about three months before that.

7) Consider maxing out your 401k by your last day of work.

[Earl Lemongrab]

A few sort of random things.

1) At many, but not all, companies your health insurance continues through the last day of the month when you terminate your job. Making the 1st day of the month you last day of work instead of the 31st can save you a months COBRA costs.

I had initially considered that, but also found out that my pension can only start on the first day of the month after I retire. So if I would have retired on the first of February, I would have medical coverage through that month but my pension would not start until March 1. By retiring 1/31, I pay a month of COBRA in Feb, but get a pension check of $3300.