7 Tips for People Planning to Retire in 2013

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Retiring this yearBy Emily Brandon

The oldest baby boomers will turn 67 in 2013. Many of this first wave have already retired, while others may be contemplating taking the plunge this year. Here are some tips for those planning to retire in 2013:

1. Make sure you are vested in your retirement benefits. While you always get to keep the money you contribute to your workplace retirement account, you don't necessarily get to keep your employer's contributions until you are vested in the company retirement plan. Some retirement accounts don't allow you to keep any employer contributions until you have been with the company for a specific number of years, while others allow you to keep a proportion of your benefit based on your years of service. Make sure you know the date after which you can keep all of your benefits, especially if you have only been with your current employer for a few years. In some cases, it can be well worth it to stick around for a few extra months or years to get a bigger retirement payout.

2. Strategize about when to claim Social Security. Personalized Social Security statements became available online for the first time in 2012, and more than 1 million people have already downloaded them. Check your statement to make sure your earnings were accurately posted to your Social Security record, and make note of how much you will receive from Social Security at various dates. Most baby boomers can claim the full amount of Social Security they have earned beginning at age 66. Boomers who sign up before age 66 will get a reduced payout. Retirees can further boost their monthly payments by delaying their first payout until age 70. You don't have to sign up for Social Security in the year you officially retire. "You have some folks who, by default because they are going to retire, decide to take Social Security, and that's not always the smartest decision," says Robert Oliver, a certified financial planner for Oliver Financial Planning in Ann Arbor, Mich. "You get delayed retirement credits the longer you wait between ages 62 and 70. For most people, it makes sense to wait."

3. Sign up for Medicare on time. You are first eligible to sign up for Medicare three months before the month you turn 65. This initial enrollment period lasts through the three months after that birthday. If you don't sign up during this seven-month window, your monthly premiums will increase by 10 percent for each 12-month period you were eligible for, but did not enroll in, Medicare Part B. If you are covered by a group health plan based on your or your spouse's current employment after you turn 65, you need to sign up within eight months of leaving the job or health plan to avoid the penalty.
People who retire before age 65 will need a plan to maintain their health coverage until they become eligible for Medicare, such as COBRA continuation coverage or a spouse's health plan. "People really need to think about the cost of health insurance, especially if they are retiring from a company that has paid all their premiums," says Connie Brezik, a certified financial planner for Asset Strategies in Casper, Wyo., and Scottsdale, Ariz. "They might not realize how big a part of their budget that is going to be."

4. Protect your savings. If you haven't done so already, you need to shift your primary investment strategy from increasing your wealth to protecting what you have. "As you get closer to retirement, you normally are not willing to take on as much risk because you can't stomach another downturn like we did during the Great Recession," says Oliver. "For most people, as they get closer to retirement, they can stand less risk, so they get more conservative. They are going to start living off their portfolio, so they can't afford to lose value in their portfolio because they need the income from it."
5. Develop a plan for spending down your assets. Retirees need a plan for how they will convert their retirement savings into a stream of income that will pay their monthly bills. "You want to be careful not to take too much from your savings too early in retirement," says Joan Gagnon, a certified financial planner for Gagnon Wealth Management in Mansfield, Mass. "You want to have a plan about where to take your assets from and try to stay within the plan." Remember to factor in the income tax that will be due on traditional 401(k) and IRA withdrawals. "If all your money is in a 401(k) or IRA, if you want to spend $100, $30 of that may go to Uncle Sam first, and you only have $70 to spend," cautions Brezik. "You should have funds saved and accumulated outside of those types of accounts to avoid spending a lot of money on taxes."

6. Don't forget to take required minimum distributions. After you turn age 70½, you will be required to take annual withdrawals from your traditional 401(k) and IRA accounts. The penalty for failing to take these distributions is a stiff 50 percent penalty on the amount that should have been withdrawn.
7. Consider maintaining your connection to the workforce. Some retirees find they miss many of the friends and daily challenges they encountered in the workplace. If you still enjoy some aspects of your job, consider shifting to part-time or consulting work instead of pursuing a full-time life of leisure. "Keep an open mind and don't burn any bridges," says Oliver. "Plenty of people think they are ready for retirement, and retire and find that they really enjoy working and at least want to keep working on a part-time basis."

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16 Comments

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crimeslawyer

This is not your parents' America. Be prepared for the far left fanatics to ruin your country. Don't count on anything.

January 15 2013 at 2:26 PM Report abuse rate up rate down Reply
rgparker57

By the way we will be 60 this year....

January 15 2013 at 10:53 AM Report abuse rate up rate down Reply
rgparker57

My wife and I retired in 2012. We own our home, and our cars, etc. We do not have any debt. We never earned more than 125,000 per year. We have 800,000 in our retirement account. We raised our two children. It can be done if you don't try to keep up with the jones..

January 15 2013 at 10:52 AM Report abuse +1 rate up rate down Reply
2 replies to rgparker57's comment
itacurubi

That's the key. Live below your means. I remember advising a young colleague just out of school many years ago: Buy less house than you can afford.

January 16 2013 at 8:31 AM Report abuse rate up rate down Reply
mpeter4876

You should have at least that amount of money in savings. You both worked and both saved . I myself am single now/ two kids no mortage/ and never made more than 43000 a yr and I have a little over 480 thou. go figure.

February 07 2013 at 3:21 PM Report abuse rate up rate down Reply
vlady1000

3 more years for me. I am 99.9 percent I will be fine, but that .1percent is a concern with today' s mess. If that .1% happens, I guess no matter what I did soul not matter cause the whole country will be in such trouble I would be out of a job anyway.

January 03 2013 at 10:21 PM Report abuse rate up rate down Reply
Condley

I retired at 54. Most of these points depend on your individual situation. The most important point is to make sure you do what you you want. Over the next 10-20 years the decline in the US will affect you. Be prepared for the unexpected, and if it doesn't happen, then you have extra funds to party with.

January 03 2013 at 7:02 PM Report abuse rate up rate down Reply
Richard

This article forgot to mention - think seriously about leaving the US for your retirement. There are twelve dozen countries offering stable governments and where your money goes A LOT FURTHER than here in the USA. And best of all when you read about all the money the US sends out of the country in foreign aid you can chuckle. Maybe some of that Father Christmas foreign aid will end up in your new home country.

January 03 2013 at 4:43 PM Report abuse +5 rate up rate down Reply
1 reply to Richard's comment
itacurubi

But probably not much. US foreign aid is really quite small. The real risk of living in a foreign country (and I spent more than a third of my life living and working in other countries) are variations in the exchange rate ... in most of the countries where your money goes a lot further, it does so because of a favorable dollar/local currency exchange rate.

January 16 2013 at 8:38 AM Report abuse rate up rate down Reply
crimeslawyer

Plan 1-7. Make sure you have enough money. Period.

January 03 2013 at 2:18 PM Report abuse +2 rate up rate down Reply
Rhianon

Frank, I am 50 and I'm not screwed at all. First of all, I don't look or act 50 yet. I found a job in housekeeping 3yrs. ago and I now make $19.44hr. cleaning offices & restrooms for Exxon-Mobil offices.

January 03 2013 at 11:37 AM Report abuse -1 rate up rate down Reply
2 replies to Rhianon's comment
Frank

Rhianon - if you could make that much cleaning offices and restrooms, power to you.

January 03 2013 at 1:26 PM Report abuse rate up rate down Reply
Frankie Baby

Rhianon, What does the comment "I don't look or act 50 yet" mean? I know plenty of 50,60, and yes 70 year olds that can run circles around their younger counterparts. Keeping busy, and eating well. Don't smoke or drink, and that's half the battle. Of course their is genetics. We've all known people in their 30's and 40's that look 20 years older than they should.

January 03 2013 at 2:34 PM Report abuse +1 rate up rate down Reply
Frank

I agree with unatzs, if you are over 50 you are basically screwed. Yes you will probably find a job. but be prepared for minimum wage - $12/hour. We have spent much of our safety net trying to stay afloat (downsized out of a job. Now working, but making 1/4 of previous salary). We will be in trouble down the road if real jobs don't pick up. Good news is we had the safety net. Bad news is it's depleting rapidly.

January 03 2013 at 10:51 AM Report abuse rate up rate down Reply
1 reply to Frank's comment
sallyjay2000

The trouble has already begun because jobs for people over 50 are scarce. Alot of discrimination goes around. And what they don't tell you about Social Security retirement is that they base alot of your benefits on the last 10 years you worked. Which means most "ready to retire" retirees couldn't find jobs and will be screwed. I have a friend that worked all her life and when she retired she stated she didn't get much. That's because she got sick around the age of 55 and didn't work for much over those 10 years. It's all a dirty plan!

January 16 2013 at 12:40 PM Report abuse rate up rate down Reply
unatzs

Plan to retire? I was retired by this job market and the policies of the idiots in DC. Well educated 40+ years in the work force and no prospects. Big Bird(obama) said in his 1st year" I expect 8% to be the new norm, and those over 50-55, your prospects are dim".

January 03 2013 at 10:30 AM Report abuse rate up rate down Reply