The transition into retirement can be exciting. This checklist reviews key topics to think about to help make your retirement plans a reality.

Each day, about 10,000 people retire.[1] There are a number of steps you can take now to help bring your goals of an enjoyable and fruitful retirement to life.

In between retirement parties and daydreams about the next phase of your life, it’s important to begin planning to ensure you are able to make the most of your retirement.

Set Your Goals

Some common goals are listed here. Add other goals that may not be included on this list and then prioritize them by importance to you.

  • maintaining your current lifestyle throughout retirement;
  • not outliving your resources;
  • protecting a spouse's financial security;
  • providing for other family members;
  • additional discretionary experiences; and
  • philanthropy.

Determine Your Spending

Consider the broad range of costs you’ll need to plan for in retirement. Most Americans are concerned about the high medical expenses they might face in retirement.[2] Yet, housing is the top expense for retirees across all age groups, and transportation costs rival the amount spent on health care.[3] Your advisor can help you estimate costs and plan realistic future budgets, factoring in such things as inflation, expense spikes, and potential changes in your lifestyle and/or health, including:

  • essential expenses such as housing, transportation, and food;
  • discretionary expenses such as travel, a second home, and leisure activities;
  • health care costs including both the cost of Medicare coverage and costs not covered by Medicare;
  • potential long-term care expenses;
  • philanthropic donations; and
  • assistance and/or gifts to family members.

Know Where You Stand

Determine how much of your income will be derived from each of the following sources and whether these sources are guaranteed or subject to risk:

  • Social Security retirement benefits and spousal benefits;
  • defined benefit pension plans, and what your spouse may receive after your death;
  • traditional retirement accounts, including 401(k) s, 403(b)s and Individual Retirement Accounts (IRAs);
  • Roth retirement accounts, including 401(k)s,403(b)s, and IRAs;
  • Health Savings Accounts (HSAs);
  • taxable accounts;
  • real estate;
  • life insurance policies;
  • annuities;
  • wages, if you plan to work in retirement;
  • inheritances;
  • trust income; and
  • nonqualified deferred compensation, stock options, restricted stock.

Create a Budget

Once you determine how much you will need and compare it to how much you will have, it is a best practice to create a reasonable budget.

Draft a Withdrawal Plan

How you withdraw money from various sources can greatly affect what you ultimately take home. Your advisor can model different scenarios to help you choose what is best for your circumstances, weighing all the above and factoring in income taxes.

Make your Social Security Decision

There are three main considerations when choosing when to start taking Social Security:

  • How much will you receive? Claiming prior to full retirement age (FRA) can reduce the amount you receive by approximately 25%; waiting until age 70 can increase the amount by about 32%.[4]
  • What is the impact of working after you start Social Security benefits? If you take Social Security prior to reaching FRA and earn more than a certain amount, part of your benefit will be withheld.[5]
  • Will your spouse rely on your Social Security benefits during your lifetime or if you predecease him or her?

High medical expenses are Americans’ biggest financial worry about retirement. Yet, housing is the top expense for retirees across all age groups, and transportation costs rival the amount spent on health care.

Make Your Health Care/Medicare Decisions

Options to obtain health care coverage if you leave the workforce before being eligible for Medicare, include:

  • continuing your current employer’s coverage, usually for 18 months, under COBRA[6];
  • employer-sponsored retiree health care coverage if offered; and
  • private-pay policy.

When you do become eligible for Medicare, the decisions you make will affect your budget and include:

  • whether to choose traditional Medicare or a Medicare Advantage plan;
  • which Part D Prescription Coverage plan to choose;
  • whether to choose a Medigap policy and, if so, which one; and
  • How Medicare will coordinate with any employer-sponsored health care coverage you have.

Examine Options for Long-Term Care Needs

According to the U.S. Department of Health and Human Services, 70% of people turning age 65 can expect to use some form of long-term care during their lives.[7] Consider which of the following you might rely on:

  • family-provided care;
  • self-pay;
  • long-term care insurance; and
  • medicaid.

What will you rely on in retirement? Your family? Long-term care insurance? Regardless of the source, you’ll need to establish that as early as possible.

For more information, please contact your PNC advisor.