From finances to working part-time, you have a lot to consider before retiring
Most Americans look forward to their retirement for years, if not decades. It’s a time when at last you can embark upon all the activities you wished you’d had time and resources to do when you were working. It’s a stage of life that presents opportunities for new hobbies, travel, reading, volunteerism and study, or simply more time with those adorable grandchildren.
But before we go off into the retirement sunset, let’s take a look at some legal tips to consider before retirement.
#1 Know when you can retire.
Legally, you can start collecting Social Security benefits at age 62, but you may want to wait to maximize the payments you receive. Study up on how to calculate the best time for you to retire. The benefits calculator on the AARP website may help.
#2 Examine all of your personal finances, including those of your spouse.
Calculate any loan payments or mortgage payments you’ll have to make after retirement, or whether you can pay them off beforehand. Try to anticipate medical expenses, such as premiums for health insurance, prescription medications and copays for planned procedures. Map out your financial future, being sure to include the salary, savings and payments your spouse has as well.
#3 Consider where your retirement dollars will have the most staying power.
Anyone who has visited a big city like New York or a small Midwestern town knows that a dollar doesn’t stretch the same in both places. Do your research; study not only the cost of living, but state tax laws, which differ widely. You may find your money will last longer if you spend your golden years in the right locale.
#4 Want to keep working? Know the law.
If you are retired but still working, experts say you may see a change in your Social Security benefits. No one wants to see deductions to income they were planning to use. So before you take on that job, find out what impact it will have on your finances. If the Social Security Administration deducts those earnings from your benefits, working may not sound nearly as sweet. Learn more about your Social Security benefits on the Social Security Administration website.
Meanwhile, those who work a part-time job may be eligible for a retirement savers’ tax credit if they contribute to a Roth IRA. That tax break is based on the individual’s adjusted gross income and the savings they put into the Roth IRA.
#5 Don’t forget required minimum distributions.
Required minimum distributions begin when you turn 72 (or 70½ if you reached 70½ before Jan. 1, 2020). Baby boomers with IRAs, SIMPLE IRAs or retirement plan accounts should review their documents for specifics on their required minimum distributions.
Careful legal planning for retirement is key
Simply put, there is much to consider before turning out the lights on your career, and this list is just a start of the many factors to consider. But when you enter into the next chapter thoughtfully, and carefully plan for the legal considerations ahead, you’re sure to add life to your retirement years.
By Brian Weber, estate planning attorney in Holmen, Wis. If you need an estate planning attorney, call him at 608-526-9320.