How to Plan for Your Ideal Retirement

Planning your retirement takes more than simply imagining an idyllic future of lazy beach days. The more you prepare, the more likely you are to enjoy your life after work. That includes getting an accurate picture of your financial condition, exploring the lifestyle and activities you want to enjoy, and creating social networks that keep you connected and happy.

Financial readiness

For most people, making sure you can afford to retire and won’t run out of money when you leave work is the primary concern about retirement readiness. Because so many workers will depend on their own savings and Social Security in retirement, they’re unsure about whether they can afford to retire. That means many people simply keep working, because that seems like the safest course of action. Meeting with a financial advisor to plot a financial plan can help ease those fears — and often reveals that you can safely retire earlier than you expected.

At age 55: If you’ve never sat down with a financial planner, take the time to do so now. Collect all your financial documentation, and then discuss strategies for collecting Social Security and evaluate your retirement savings, life insurance, debt level and how long you expect to keep working. Now is a good time to set a financial plan for your last years at work and to balance your investments in an effort to minimize risk.

One good tool is Mutual of Omaha’s retirement savings calculator.

At age 65: Assess the state of your health, career and finances so you can firm up when you’ll leave work and whether you’ll continue to work part-time. Discuss plans with your spouse, including retirement dates and your expectations about where you’ll retire and what your retirement lifestyle will be like. Consider using vacation time to “road-test” your retirement plans in the location you’ve chosen for retirement and the activities and retirement goals you’ll pursue. You may elect to receive Social Security at this time, or live off your savings and delay Social Security to increase the size of your monthly payments (see below for details).

You can check how long your savings will last with this Mutual of Omaha calculator.

At age 70: If you haven’t done so already, meet with your planner and decide how you’ll structure your retirement account withdrawals, as well as Social Security and any pension payments. Creating your retirement “paycheck” is very different from the strategies for building your nest egg. You’ll also need to plan on how to handle minimum required withdrawals from tax-deferred retirement accounts that start at age 70-1/2. This is a good time to update wills, powers of attorney and estate plans, and to make sure others can access your documents, accounts and online accounts on your behalf.

You can get a picture of how long your retirement savings will last with this Mutual of Omaha tool.

Other financial considerations

Now that you’ve got the timeline down, here are some other financial considerations that you should look at soon as possible.

When to claim Social Security: Many workers want to delay claiming their benefits in order to maximize their monthly payments, while others may need to claim benefits as early as they can. The trade-off with claiming your maximum available benefit at age 70 is that you either work longer or use savings to support yourself until that time. In other cases, retirees find that it’s better to take Social Security payments earlier while allowing their taxable investments the opportunity to continue to grow.

Balancing those risks and benefits depends on your health, family history and financial circumstances. The Employee Benefit Research Institute found that, while 26 percent of workers typically plan to retire at age 70 or older, only 8 percent manage to do so.

Here’s a picture of how your Social Security payments differ by age if you were born in or after 1960.

  • Age 62 – Early claiming means your payment is reduced by 30 percent. The maximum 2019 monthly benefit is $2,209.
  • Age 67 – Your full benefit amount. The maximum monthly benefit payment for 2019 is $2,861.
  • Age 70 – You receive 124 percent of your full benefit. The 2019 maximum is $3,770.

To calculate your actual benefits, check out the Social Security Administration’s planners and calculators.

Creating your retirement paycheck: Taking cash out after retirement is a very different situation from saving for retirement. An advisor can help you plan when to take cash from taxable or nontaxable accounts, how to help minimize the tax bite on your nest egg, and how to restructure your investments in an effort to balance inflation protection with safety for a retirement that can last as long as 30 years.

Lowering your taxes: Retirees can lower their tax bills by moving to one of the nine states that don’t levy state income taxes. Retirees who want to divide their time between two or more homes should be careful about taking the right steps to establish their tax residency in a no-tax state. You’ll find more information in this article: How to Minimize Tax Risk in Retirement.

Health and wellness: It’s natural and sensible to focus on your financial wellness as you approach retirement, but it’s just as important to consider your overall wellness. A broader approach includes making sure you can engage in activities that make you feel worthwhile, appreciated and content, along with taking care of your health and fitness just as carefully as you watch over your money. That includes preventive care, as well as lining up the resources you’ll need to stay healthy.

  • Medicare vs. private insurance. You can qualify for Medicare coverage when you turn 65, which means reviewing a number of coverage options, starting with Medicare Part A, which covers hospitalization, and Medicare Part B, which handles medical costs. There are about a dozen additional coverage options, including Medicare Advantage plans, which offer coverage through private insurers. If you retire before becoming eligible, include the cost of private medical insurance in your retirement budget.
  • Exercise and diet. If you were too busy to hit the gym or plan a balanced menu while you were working, retirement can give you a chance to form new, healthier habits. This kind of preventive care can help you avoid injuries and chronic conditions that otherwise would send you to the doctor.
  • Handle the paperwork. To be completely prepared for health issues that can come up as you get older, get your health care documentation in order. This can include a list of current medications and medical records, as well as documents that allow others to give you help, including a Health Insurance Portability and Accountability Act (HIPAA) authorization form, a health care proxy, last will and testament, living will, and durable power of attorney paperwork.

Mutual of Omaha and its representatives do not provide tax and/or legal advice, and the information provided herein is general in nature and should not be considered tax and/or legal advice.

Registered Representatives offer securities through Mutual of Omaha Investor Services, Inc. Member FINRA/SIPC. Investment Advisor Representatives offer advisory services through Mutual of Omaha Investor Services, Inc.