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Financial Planning at Every Stage: Maintaining Success

woman siting by a window holding a coffee cup

For most people, maintaining financial success involves many choices, some of them quite complex. Here are some things to consider before and during retirement to maintain your financial success.

Explore gradual retirement options.

Instead of jumping straight from 40-hour work weeks to full retirement, some people prefer a phased or gradual retirement plan. This could look like reducing the number of days in your work week or hours in your workday. It could be tricky to stay with your current employer and collect retirement income, as many qualified employer plans have strict rules in this regard. If you opt to keep working on a reduced schedule, make sure you’ll have enough income to cover your standard of living.

There could be other options too. Your employer may rehire you as an independent contractor or consultant, for instance. It’s worth starting the conversation early if you’d like to discuss alternatives to retirement. If you choose to go straight into retirement or choose a gradual retirement option, it’s important to check in regularly with your financial advisor to discuss your future plans to ensure you don’t run out of money.

Participate in social activities.

Participating in low-cost or free social activities and hobbies can help you connect with new people, give you fun things to do and provide a sense a belonging. You can join a bowling league, take cooking and baking classes, join a book club, enroll in an exercise class or even try a gardening workshop. Check out your local YMCA, libraries, volunteer organizations and senior living communities to find opportunities like these.

Consider creating a will.

There are four main types of wills: simple wills, joint wills, living wills and testamentary trusts.

  • Simple wills are what you likely imagine when you think of a will – a document that names the executor or trustee responsible for managing your estate, outlines beneficiaries (also called heirs), and designates a guardian for dependents, if you have them. A simple will works well for many people and is a good place to start.
  • A joint will is basically two identical wills used by couples who want to name each other as their sole beneficiary.
  • A testamentary trust places your assets in a trust that your beneficiaries can access after you die. This is most common for people with dependents who want to place specific conditions on when and how assets are received. The trustee is responsible for managing and distributing the trust, whether it’s a lump sum when a child turns 18, or monthly or yearly distributions starting at age 21.
  • Living wills address what happens to you while you are alive, not what happens to your assets or dependents after you die. A living will outlines your medical preferences if you’re incapacitated and unable to make decisions yourself, and designates a healthcare proxy or power of attorney to make decisions for you. This type of will may also specify the types of medical treatment you do or do not want to undergo and can include a do not resuscitate (DNR) order. Most people create a living will in addition to another will that outlines the care of property after death.

Research the cost of healthcare.

There are lots of ins and outs of qualifying and enrolling for Medicare, and health care coverage in retirement is generally much more difficult to predict than living expenses. If you’re insured through an employer prior to retirement, find out what happens to the coverage if you retire before you’re eligible for Medicare at age 65. Your employer may pay the cost of supplemental, or Medigap coverage. You may be able to make other arrangements to continue health insurance if your spouse is covered under your employer plan and you’re eligible for Medicare before they are.

It’s worth looking into long-term care insurance, especially if you’re eligible for a group plan. Purchasing coverage in your 50s or 60s is likely to cost less than waiting until your well into retirement.

These tips were shared by our team at Educators Credit Union and our partners at Banzai and GreenPath Financial Wellness.

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