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5 Key Planning Tasks to Take Care of After Retiring

Education Estate Planning Healthcare Investing Personal Finance Retirement

Deciding when to retire can be a daunting task in and of itself. Once you’ve made the decision though (generally with the help of a financial professional), you’re likely wondering what’s next? Sure, that could mean in the broad sense of what am I going to do with my time in retirement? Or what is my life going to look like? Unfortunately, we cannot answer those questions for you. We can though talk about what are the immediate next steps you need to take from a financial planning standpoint as you transition into retirement. Consider this is a sort of retirement checklist of items that should be taken care of promptly after retiring:

1. Starting your new paycheck: Up until now, you’ve always received regular pay from your employer (likely on a biweekly, bimonthly, or monthly basis). You were used to living off that regular cash flow. You counted on that recurring paycheck to cover the bills. So why stop that now? Ideally, if you’re able to, it’s best to restart that recurring cash flow but in the form of distributions from your investment accounts. This helps to ease the transition into retirement, to enable you to manage cash flow the same way you did before, and frankly to monitor your spending habits. Determining which accounts (i.e., your pretax retirement accounts vs. your after-tax accounts) to draw from are where a financial planner and tax advisor come into play. They can develop a plan based on what your projected income and spending is each year.  

2. Starting your new health care plan: Depending on your circumstances, there are likely a few options in front of you. First, if your spouse is still working and their employer offers a health insurance plan, ideally, you’d see if you can be added to that plan. If that’s not an option, you’re single, or you’re both retired, then your options are primarily based on your age. If you’re under 65 years old (Medicare age) you’ll need to enroll in private health insurance. If you’re over 65 years old, Medicare is likely your best option as it tends to be much more cost effective than private health insurance.

3. Canceling your disability insurance: For most people, their disability coverage is likely through their old employer’s group plan. If the employer was paying the premium for your disability insurance, the coverage will automatically be cancelled once you’re marked as terminated in their system. However, if you were paying the premium for any supplemental disability insurance (either through your employer’s group plan options or as a standalone policy you purchased on your own), you’ll likely need to cancel that policy on your own.

4. Deciding whether to start Social Security: You’ve paid into Social Security your whole working life, so you’re probably curious to find out when you can finally collect now that you’re retired. The decision to collect can be a complex one. At minimum (assuming you’re in good health), you’ll want to wait to collect benefits until you’ve reached Full Retirement Age (FRA). You can check your Social Security statement to find out your FRA. Where this gets tricky for most people is in deciding whether to collect at FRA vs. delaying and waiting until age 70. That is because every year you delay, your benefit increases by 8%. Then there are also certain situations where it may make sense for one spouse to collect now and another to delay until age 70. This is mostly to secure a higher survivor benefit for the younger spouse. Again, this is a complex decision with many factors to consider, so always best to consult a financial professional.

5. Rolling over your employer retirement plan: Assuming your company had a qualified retirement plan (e.g., 401(k) plan, 403(b) plan, 457 plan, etc.). Although you may have the option to keep your balance held in the company retirement plan, most people will choose to rollover their balance to an Individual Retirement Account (IRA) and/or Roth IRA upon retiring. This is mostly to give them more control over their retirement assets. Here we are talking about potentially lower fees, likely better investment options, and better ease of administration in managing distributions from the account.  

So that’s your 5 key planning tasks to take care of right after retiring.

Hopefully this overview gives you a small sense of what’s to come over the short-term post retirement. What happens over the long term after that, is up to you to decide and enjoy.