What To Do When You're One Year From Retirement

Let's next look at some strategies for when you’re a year away from retirement. Finding yourself just a year away from retirement is exciting, but don’t let that excitement distract you from some of the final steps you should take before your big day. An Investopedia article, "The Most Important Money Steps to Take the Year Before Retirement," provides some good insight.

Update your budget

First, it recommends updating your budget. What are you now anticipating your retirement expenses to be? Next, review your sources of retirement income. Do those two totals balance out? Will there be enough money left over to provide time for travel and socializing?

Also, work with your financial services professional to review upcoming required minimum distributions, or RMDs, because a timing or withdrawal mistake could have you facing big tax penalties.

Get below the surface and ask tough questions:

Do those great views also mean huge crowds of tourists? Do some restaurants and entertainment venues close during the off-peak season?

Understand Medicare*

If you’re a year away from retirement and haven’t yet reached age 65, you may want to spend time discussing Medicare with your financial services professional. Ask them about Medicare’s four parts, what each part covers, when you should sign up, and how much your premiums may be. You should also learn what Medicare doesn’t cover as well as coverage gaps, and whether your current medical provider accepts Medicare.

From there, work to find the best coverage you can at a price that fits your budget and needs. Also, be sure to thoroughly understand the policy before you use it. That way, you’ll be less likely to be hit with unpleasant surprises.

Lastly, when comparing Medicare to your current employer-subsidized coverage, it may be smart to schedule some elective procedures before you retire. Don’t forget that Medicare generally doesn’t cover things like dental procedures, glasses, and contact lenses.

Consider refinancing

While this certainly wouldn’t be a good option for everyone, the article next suggests potentially refinancing your mortgage before your retirement. Doing this process before you retire may make getting approved more likely. While you can still get approval after you’re retired, the process is different because lenders determine what you can afford by using an asset drawdown or asset depletion model.

If you don’t have significant assets, you might not qualify for refinancing. This is a time to look at a reverse mortgage option that doesn’t have income requirements like a regular mortgage.

Get ready for Social Security

Depending on your age, the one-year mark may also be the ideal time to decide when to file for Social Security if you haven’t already done so. If you haven’t already filed, do you think you’re likely to need Social Security income as soon as you retire? Or could you afford to retire for a while before you need that money?

Your monthly Social Security payment is calculated, in part, by whether you’ve reached your full retirement age or are filing before or after that age. If you file before your full retirement age, your monthly payment will be smaller. If you file after your full retirement age, you’ll receive a larger benefit.

If you don’t already know your full retirement age, you can find it on the Social Security Administration’s website or by reaching out to your financial services professional.

SOURCES

https://www.investopedia.com/articles/ retirement/07/5yearstoretirement.asp

https://www.investopedia.com/retirement/last- year-you-retire/

*Call our office for details on Medicare coverage and reverse mortgage options. We’re here to educate and make you aware of the options available to you.