10 Tips for a Happy, Secure Retirement

At first it may seem that the decision to retire is easy. All you need to do is stop working and then sign up for Social Security and Medicare -- right?

Actually, it is much more complicated than it seems, especially if you want to make sure you will have enough income to really enjoy your Golden Years. Many people discover the first thing they need to do is discuss their plans with a professional. Sometimes you can attend free seminars through your employer, bank, credit union or local hospital to get information on a variety of retirement topics. It is highly recommended that you take advantage of any special programs which are offered in your area.

My husband and I have attended a number of retirement planning seminars, and learned something new every time.

Before you quit your job, here are ten things you need to think about in order to be sure you are prepared for retirement and that you will be maximizing your benefits, minimizing your expenses and you are as prepared as anyone can be.

Read, Go to Seminars and Learn Everything You Can

If your employer or other businesses you patronize offer retirement seminars, take advantage of them. These informative meetings will help you understand what opportunities may be available to you through your employer, your bank or other financial institution. Some of the topics that may be discussed could include your company benefits ... which may include pensions, retirement packages, or assistance with your 401(k) and IRA. You will want to take advantage of any programs that are offered.

If you attend a seminar that is sponsored by your bank, money manager or brokerage firm, however, do not sign up for anything or turn over your savings until you have had time to go home and think about it, do more research on what they are offering and do a little comparison shopping. It may be difficult, if not impossible, to change your mind once you have committed to some of these options.

You Do Not Want to Miss the Medicare Deadline

During the three months before or after your 65th birthday, you will need to apply for Medicare, whether or not you have stopped working! If you do not apply for basic Medicare about the time you turn 65, your premiums could be permanently higher once you begin to use it. This is an important deadline which you do not want to miss, even if you are still working and you still have insurance through an employer.

Basic Medicare Does Not Provide Full Coverage

Once you are ready to start using Medicare for your health coverage, you need to decide whether you will want to purchase a Medigap policy, which covers many of the expenses that Medicare does not cover, or whether you would prefer to get a Medicare Advantage Plan in which all your medical needs are covered by your HMO. There are advantages to both.

In general, a Medigap policy is more expensive, but it may allow you to stay with your current doctors. A Medicare Advantage Plan can be much more affordable, but you usually need to use the doctors within the HMO network you select. There are a wide variety of choices in both types of plans, so you will want to explore them all.

The Answer is Not the Same for Everyone

Research how much money you will receive when you begin collecting Social Security and decide when is the best time for you to begin to collect. If you start collecting when you are 62, you may only earn about half of what you would receive if you waited until you are 70. During the years in-between, the amounts will vary on a sliding scale. The older you are when you begin to collect your benefit, the larger your benefits will be. You need to consider factors such as your health, how long you expect to live, and the amount of money you need to live on once you stop working before you make a final decision.

The answer may not even be the same for a husband and wife. For example, he may decide to start collecting at age 70 and she might collect at an earlier age. Or they both may decide to collect later or earlier. You want to fully understand your options before you make a decision.

Do You Want to Stay Where You Are, or Move Somewhere Else?

Decide where you want to live. Do you have a home that is nearly paid for or has a very low house payment? In that case, you may choose to stay right where you are. On the other hand, you may decide you would be better off down-sizing to something smaller, selling your home and renting so that you can invest your profit, moving somewhere that is nearer your adult children or other family members, or retiring to some dream location where you have always wanted to live. In some cases, you may even choose to move in with one of your adult children, because of your own health issues or so you can help one of your children with babysitting or other services.

Whatever you decide, you need to give it careful consideration and understand all the implications of each choice … in taxes, medical care, family relationships, etc. Fortunately, in most cases you can change your mind if you decide you want to do one thing now and something else in another ten or fifteen years.

You Want to Maximize Your Income ... While Making Sure Your Money Will Last the Rest of Your Life

Decide how you will invest any retirement savings you have in order to supplement your retirement income. Do you wish to put the money in a lifetime annuity, invest in dividend paying stocks, put your money into a managed fund or handle it in some other way?

This is a decision you want to really think about and you will almost certainly want to discuss it with your bank, investment representative, or certified financial planner. In some cases, such as if you buy an annuity, you may not be able to change your mind later. If you make other choices, such as purchasing dividend paying stocks, you need to think about who will select those stocks and what you will do if you regret your choice.

What is The Best Withdrawal Rate for You?

Decide what your withdrawal rate will be from your retirement savings. Some financial planners suggest you never withdraw more than 3% of your initial savings in a single year, and increase the amount very slowly. In this way, the hope is that you will never run out of money.

In other cases, financial planners suggest you live off a portion of whatever you receive in dividends and interest, never using the entire amount of income, so that your principle continues to grow slowly over the years.

Meeting with a financial planner is a good way to decide the appropriate withdrawal rate which will fit your needs.

Many People Will Need Extra Income During Retirement

Will you need to supplement your income in other ways? Once you know where you will live, how much your cost of living will be, how much your Social Security will be, the amount of any pensions or investment income you can expect, you will know whether or not you have enough money to live the lifestyle you want. If you fall short, you may need to supplement your retirement income with a job.

There are many reasons why you might wish to have a retirement job. For example, if you are concerned about not having enough savings at the time your retire, you could postpone withdrawing money from your retirement account and get a part-time job during the early years of your retirement.

This is your opportunity to do something fun and interesting. Did you always want to work in an art gallery, be an online writer, do odd-jobs for other people, or work in other areas? This is your opportunity to have that fun job and supplement your retirement income at the same time.

You Could Live Another 20 to 30 Years. What Do You Want to do With That Time?

Once you have planned the financial aspects of your retirement, you will be free to plan the social, physical and intellectual activities that interest you. These are very important if you want to have a happy, healthy retirement.

What classes do you want to take? What social activities interest you? Do you want to learn to play bridge or study early American history? What will you do for exercise … play golf, take yoga, or go swimming in your community pool? This is the time in your life when you can really choose to do the fun things that will interest you and enhance your life.

However, now that you are totally responsible for making your own plans, you have to realize that these activities will not happen unless you reach out to your your local senior center, college or homeowner's association and find out what opportunities are available.

You may also decide that your life would be enriched by volunteering at a local school or food bank, or through your church or civic organization. You now have the time to do all those things you have always wanted to do! It's up to you to make the most of this opportunity.

Completing Your Will and Other Important Documents Will Free You of Worry

Make sure you have a will, a trust, a medical power of attorney and an advanced directive that determines things such as whether or not you want to be resuscitated by CPR, if necessary. You may also want to pre-plan your funeral. Once you have done these things, you can put them out of your mind and spend your time enjoying the rest of your life.

In addition to all the other planning you have done at this point, you may also consider writing out any specific instructions you have for your family members.

We have a notebook that is labeled In the Event of our Death and we have told our daughters where to find it. It contains copies of our will, a list of people who should be contacted, our funeral requests, copies of our medical and life insurance information, bank account numbers and miscellaneous other information that our children would need in the event of our unexpected death.

It gives us peace of mind to know that we are saving our children from having to figure out anything more than absolutely necessary.