Retiring Soon? 5 Things to Do Now

/in /by

1) Delay claiming your Social Security benefits, if possible. You can begin collecting Social Security at age 62, but your monthly benefits will be permanently reduced. It’s usually best to wait until full retirement age to claim un-reduced benefits. But if you can wait to claim until your full retirement age, your benefits will grow 8% a year, up until age 70.

2) If you don’t have a financial plan, get one done. If you have a financial plan, update it. It should have five areas: investments, income, tax, health care, and estate planning.

3) Start saving for an emergency fund that can be used approximately five years away. The reason for this is that by the time you retire you will have saved two years of expenses in cash (in your retirement plan). You should also consider having about three months’ worth of income liquid in a money account so it can be accessed in an emergency or an unexpected life event.

4) Max out your contributions to your retirement accounts. Consider maximizing your employer plan’s 401(k) prior to December 31. Please also consider maxing out the contributions into any IRAs, 401(b)s, or 529 plans. Take advantage of all tax-deferral vehicles, assuming you don’t need the assets in the near term.

5) Rebalance your portfolio. Sell some of the winners, and reallocate some of that cash. You want to rebalance so that you can get the most return for the amount of risk you want to take. If your portfolio is not rebalanced, you can be taking on more risk than you should. On the other hand, you may also want to try to invest so that you will maximize your retirement and take out more risks.

Long Term Care Insurance

/in /by

As an estate planning attorney, I am often asked about how to protect assets from the government if long term care is needed. Long term care is expensive. Long term care insurance is an excellent alternative to having to spend down almost all of your assets to qualify for Medicaid or AHCCCS. Policies vary so you need to talk to a financial planner who works with long term care insurance.

The number one fear of many Americans, particularly retirees, is running out of money before they die. This is understandable, given the volatile economy and the specter of nursing home costs. Although you cannot control the economy, you can protect your hard-earned assets from the cost of round-the-clock care in a long-term care facility. In fact, you may insure the option to have your long-term care provided in your own home, but only if you obtain such coverage through a proper long-term care insurance contract while you are insurable.

Regardless, if you wait too long, your options may be very limited. In a worst case scenario, you could end up depleting your assets.