As you transition into retirement, you’ll be faced with decisions that will impact the rest of your life.

• Any 401(k) plans, IRAs, savings and other accounts you own will require a new point of view – how you manage your nest egg for income to last the rest of your life.
• Any pension plans you may have, along with Social Security, will require some well-informed decisions.
• Your healthcare and insurance needs will be more important than ever, but with less or no support from former employers

The key goal is maintain your chosen lifestyle while working to ensure you do not outlive your assets.

Financial Needs

The closer you are to retirement, the easier it will generally be to estimate your financial needs in order to maintain your standard of living. One frequently cited estimate is to calculate 80% of your pre-retirement income.

When determining your ideal retirement income, there are many questions to consider, including:

• At what age do you wish to retire? The earlier you retire, the longer you will likely need your nest egg to last. And the age you choose will also impact the amount of your Social Security payments.
• What kind of lifestyle do you plan to maintain? Do you intend to travel extensively, or stay close to home and participate in your favorite hobby?
• What type of expenses do you foresee having?

The more you know about your future expenses, the better. Once you have an approximation your required annual retirement income, you can make better-informed decisions when it comes to allocating your resources.

A financial professional can help you estimate and plan, based on experience and training in retirement issues. You can also use the resources below to do some quick estimates and give you more background.

If you have concerns about how long your nest egg might last, you might consider an immediate annuity to guarantee income for life. 

Guarantees are based on the claims paying ability of the insurance company that issues the annuity.

When To Retire

Choosing when to retire can take careful consideration. Should you decide to retire before the age of 65, it may affect your health insurance, as your employer-sponsored coverage could end with your employment.. At the age of 62, you become eligible to begin collecting Social Security, though at a lower rate than if you retire later. Only you can know when you’re emotionally ready to stop working. But you should be sure to understand how the timing may impact your future income.

Early Retirement Offer

In some cases, your employer may accelerate your retirement decision-making process with an early retirement package. If the offer is optional, you will need to thoroughly review the details of the package before deciding if it's in your best interest. It is important to understand:

• The payout options
• How your pension and Social Security will be affected
• Your health insurance coverage options
• Any other perks associated with the offer

It’s also necessary to consider what would happen if you decline the offer. Separate from the offer itself, should be the knowledge that you are financially ready to retire. Talking to a financial professional may help you evaluate your financial readiness and your options for structuring your retirement portfolio.

For information to help you evaluate an early retirement offer, the following article may be helpful.

Investments & Savings

Chances are, as a retiree you’ll want to set a budget for yourself based on the scheduled amounts you will expect to receive from any retirement accounts, pensions, interest paying accounts and Social Security payments. Should you decide to keep some portion of your funds invested in equity markets and they perform well, the extra dollars will be a bonus. But there is no way to predict the ups and downs of the market, so you will want to be sure your needs are covered.

To get an estimate of what your income might be, you may want to use our Retirement Income Calculator.

Upon leaving your company, you will have the option to rollover your 401(k) plan distribution, or to leave it in your company’s plan. Your choice depends in part on how satisfied you are with the investment options your company’s plan offers.

You can roll it over into an IRA, but be aware that there is more than one way to do a rollover and there may be consequences and penalties. For more information, see our article under Learn More, below

It is important to note that, beginning the year you turn 70-1/2, you are required by the IRS to withdraw minimum amounts from certain retirement accounts annually.

If you want the stability of receiving a specified amount from your retirement portfolio on a regular basis, another option for that rollover may be an annuity. Upon retirement, you could take some proceeds from any retirement savings, such as 401(k)s and IRAs, to create a personal pension through an immediate annuity.

Annuities offer the option to provide income for life or, optionally, for the life of both you and your spouse. With certain other optional features, you may be able to benefit from planned increases in the amount you receive, and even be able to keep some of your funds invested in equity markets while guaranteeing certain base amounts you can rely on.

Social Security

If you worked and paid the required amount of social security taxes, you will be entitled to receive social security benefits upon retirement. Although it is a steady source of income, the amount usually leaves a gap that must be filled from other sources of retirement income.

It will be up to you to decide when to begin your social security benefits, and you need to apply three months before you wish to receive your first check. You can begin as early as 62, but you won’t be entitled to the full amount unless you retire at your designated full retirement age. At present, the full retirement age varies from 65 to 67 years, depending upon your year of birth. Delaying retirement can increase your benefit amount. The Social Security Administration has information on their website to help you find your full retirement age and estimate your benefit

In our Retirement Common Questions page, you can find information regarding whether your social security benefits may be subject to income tax, as well as under what circumstances your children might be eligible for benefits, based on your earnings upon your passing. It’s important to note, as the population increases and puts a strain upon the existing system, the future of social security is uncertain.

In addition to a retirement benefit from the Social Security Administration, you will also be eligible for survivor’s benefits, disability insurance and Medicare.

Insurance and Healthcare

At a time in your life when healthcare is perhaps most important, getting the right coverage during retirement may not be as straightforward as when you were working.

If you retire at 65 or older, you will be eligible for Medicare. But if you retire before 65, you’ll need to explore other insurance options. If your company doesn’t offer coverage, or extensions of coverage, to their retirees, you may find yourself considering getting your own insurance or extending your COBRA.

Based on certain qualifications, COBRA allows you to temporarily continue health coverage after leaving employment, though you may well no longer receive an employer subsidy of the premium, resulting in a higher out-of-pocket cost.

In some cases, Medicare won’t cover enough of your medical expenses and a Medigap policy is needed to supplement coverage. Offered by private insurance companies, Medigap provides different standardized plans to suit your needs.

For those who don’t have the resources to pay for their own care, Medicaid offers its services, including full or partial coverage of the following:

• Inpatient and outpatient hospital care
• Prescription drugs
• Skilled care
• Nursing home care
• Transportation to medical treatments

As eligibility requirements are intricate, it is recommended that you speak with a Medicaid planning specialist before applying. A quick summary of the Medicare, Medigap, and Medicaid programs can be seen in this helpful comparison chart.

One expense that may not be covered by HMOs, Medicare, or Medigap is long-term care. Although Medicaid does cover some of the costs associated with long-term care, financial eligibility requirements are strict. You may wish to consider long-term care insurance.

Estate Planning

In most cases, when transitioning into retirement, you are thinking not only of yourself, but also of your family and their role in this new stage of your life. Being set for your retirement is important. But you also want to be sure your loved ones are taken care of in the event something unforeseen happens.

If you are not yet covered, you may want to purchase life insurance to protect your beneficiaries against unexpected expenses. With some forethought, you may be able to minimize gift and estate taxes and preserve more of your assets for those you care about.  You should consult with an attorney and/or tax advisor when creating an estate plan.

Planning for retirement and actually living out that plan can be two different things. For that reason, it is essential that you make the most of your financial, healthcare and lifestyle choices.