My husband and I have been doing some intense retirement planning over the past two years.
But here’s the thing. We are still six to seven years from when we hope to move into another season of our life. Of course we’ve been saving, but working out the nitty-gritty of this stage should happen long before you give your employer your retirement date.
Because, as we found out, if you plan far enough in advance, you can correct some things. For us, it was realizing that we needed to switch health providers so that we have insurance in the gap years – the time between when we retire and when we qualify for Medicare. Plus, we had our kids later in life, so even after we retire, we’ll need to have adequate insurance to cover two of three children, who will still be in college.
Some of you may have your sights set on 2018 as the year you want to leave a 9-to-5 job. If so, I hope you have a plan. If not, here are some articles that may help you create a checklist of must-dos.
Read more: 7 Things to Do Before You Retire in 2018
Abby Hayes, a personal-finance blogger, recommends first making sure you know what regular income you’ll be receiving, such as money from a pension or Social Security.
“This stable income should form the basis of your budget, but probably won’t cover all of your expenses,” she writes. “This is your base retirement income that your savings and investments build upon.”
Maurie Backman, writing for the Motley Fool, pulled together a list of five moves to make before retiring in 2018. I’m fan of No. 3: Pay off your mortgage.
“If you’re nearing retirement and still have mortgage debt, you should aim to pay it off before you bring your career to a close,” Backman writes. She also recommends familiarizing yourself with required minimum distributions, or RMD.
“In a nutshell, once you turn 70½, you’re required to withdraw a specific amount from your traditional IRA or 401(k) each year,” Backman says. “If you don’t end up taking your RMD in full, you’ll be penalized to the tune of 50 percent of whatever amount you fail to withdraw.”
On this topic, I recommend you read this from Minnesota Public Radio commentator Chris Farrell: Don’t understand mandatory withdrawal rules for IRAs, 401(k)s? Join the club.
“I have long railed against tax code and regulatory complexity when it comes to retirement savings plans,” Farrell recently wrote. “ I wish Washington would focus on making the savings-for-retirement and withdrawals-during-retirement as simple as possible.”
Finally, Dana Anspach, a certified financial planner writing for the Balance, has a helpful pre-retirement planning checklist: Learn How to Prepare Financially for Retirement
Retirement rants and raves
I’m interested in your experiences or concerns about retirement or aging.
This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to firstname.lastname@example.org. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”
Last week’s retirement newsletter hit home for a lot of folks who wanted to rant about the frenzy around bitcoin investing: Should you invest in bitcoins for retirement? Only if you think riding a rollercoaster without a safety harness is a good idea.
Here’s what one of my most devoted readers had to say about this electronic currency.
Thomas J. Druitt of Paducah, Ky., wrote, ““For anyone thinking about speculating in bitcoin I suggest that they read a book written in 1841 by a Scottish journalist named Charles Mackay titled ‘Extraordinary Popular Delusions and the Madness of Crowds.’ They might find after reading Mackay’s book that the current bitcoin mania has much more in common with the Dutch tulip bulb mania of the early 1600’s than with anything that might be called an investment vehicle. Like bitcoin, tulip bulbs had no underlying rate of return and nothing to financially support their ever-increasing price other than the hope that they could be sold a little later on at a higher price to some poor sucker who bought in to the madness closer to its end than to its beginning. Anyone buying into the bitcoin popular delusion should be made aware that they are buying into a high-stakes game of musical chairs in which the only certain outcome is that when the music stops playing there will be a lamentable acute shortage of chairs available to accommodate the vast hordes of bitcoin owners desperately seeking any landing spot where they might ditch their now rapidly depreciating bitcoin assets.”
Newsletter comments policy
Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find that doing so encourages thoughtful and civil conversation. I want the newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions such as when I’m asking questions that might reveal sensitive information or cause conflict.)
Have a question about your finances? Michelle Singletary has a live chat at noon every Thursday where she discusses financial matters with readers. You can also write to her directly by sending an email to email@example.com. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read more Color of Money columns, go here.
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