A financial best practice is to manage our finances today so we are able to maintain our pre-retirement lifestyle during our retirement years.  Here are some action steps we can take to have the money we need throughout our lifetime.

• I have estimated how much it will cost to sustain my retirement lifestyle.
  • Housing and utilities – where will I live?
  • Food – at home and away from home
  • Transportation
  • Clothing and personal care
  • Medical and health care
  • Recreation, entertainment, and travel

• I have estimated my average life expectancy for retirement planning purposes.  In 2018, the average life expectancy in the U.S. was 78.7 years.  
  • Source:  https://www.cdc.gov/nchs/fastats/life-expectancy.htm

• I have observed my income and expenses; calculated how much they are now and have projected what they will be during my retirement years.  Sources of retirement income include:
  • Social Security
  • Defined Benefit and/or Defined Contribution Plan
  • Home Equity
  • Reverse Mortgage
  • Income from earnings
  • Income from assets
  • Source:  https://www.finra.org/investors/learn-to-invest/types-investments/retirement/managing-retirement-income/sources-retirement-income

• I have estimated the sources and amount of income during my retirement from Social Security, employer provided retirement plans, and personal savings and investments.

• I know how much Social Security I can expect?
  • The estimated average Social Security retirement benefit in 2021 is $1,543 a month.
  • The maximum benefit — the most an individual retiree can get — is $3,148 a month for someone who files for Social Security in 2021 at full retirement age, or FRA (the age at which you qualify for 100 percent of the benefit calculated from your earnings history).
    The maximum benefit depends on the age at which a worker chooses to retire.
  • You can estimate the amount of Social Security Benefits/Medicare Benefits that you will receive when you retire.  Order your earnings statement from SS online at https://www.ssa.gov/myaccount/.  Email at https://secure.ssa.gov/emailus/.  You may also call:  1-800-772-1213.
  • Review your benefit statement annually.
  • Information about benefit increases and earning limits can be found at   https://www.ssa.gov/cola/.

• I have initiated and have a plan for increasing my contributions to my employer-provided retirement plan, my individual retirement plan or personal savings and investments.
  • I know what employee benefits I will have in retirement.
  • I know when I am eligible to receive my employer-provided retirement plan benefits.
  • I have reviewed the benefit statement from my employer.  I can request it if it is not provided periodically.

• I have defined my financial goals for retirement and have a plan to reach those goals.
  • Ideally, I contribute the maximum amount I am eligible to contribute.
  • I contribute at least the amount required to receive a match if one is available.

• I have the following type(s) of retirement plan(s).  Circle the ones that apply:
  • Traditional Individual Retirement Arrangements (IRA)
  • Roth IRA
  • 401(k) Plan
  • 403(b) plan– Tax sheltered annuity
  • SIMPLE IRA plan (Savings Incentive Match Plans for Employees}
  • SEP plan (Simplified Employee Pension
  • SARSEP plan (Salary Reduction Simplified Employee Pension)
  • Payroll deduction IRA
  • Profit-sharing plan
  • Defined benefit plan
  • Money purchase plan
  • Employee stock ownership plan (ESOP)
  • Government Plan
  • 457 (b) –Deferred compensation
  • For information about getting help with choosing a retirement plan, click on this link – https://www.irs.gov/retirement-plans/plan-sponsor/types-of-retirement-plans

• I know when I will be vested, when I can retire, and what benefits I can keep.

• -I understand how and when I can withdraw my retirement benefits.  Examples are:
  • Life annuity with guaranteed payments/period certain guarantee [period of years (10/20) guarantee].  Payments are made for the longer of the life of the participant or some specified period of time.
  • Annuity certain with specified amount of monthly guaranteed payments after which time all payments stop.  An annuity certain continues to be paid whether the participant survives the annuity period or not.
  • Joint and survivor [percent (50, 66 2/3, 100%]
  • Lump-sum payment
    • Take distribution immediately as lump sum and pay taxes on it
    • Transfer distribution to IRA or qualified plan of new employer
    • Installment.  Participant elects a payout length based on earnings assumptions, a payout amount is determined. Payment stops when period is over. If assumptions are exceeded, participant gets a refund.

• Money that is pulled out of a tax-deferred retirement account is subject to regular income taxes plus a 10% penalty if withdrawn before 59 1/2 (with some exceptions).

• Your required minimum distribution is the minimum amount you must withdraw from your account each year. You generally have to start taking withdrawals from your IRA, SEP IRA, SIMPLE IRA, or retirement plan account when you reach age 72 (70 ½ if you reach 70 ½ before January 1, 2020). Roth IRAs do not require withdrawals until after the death of the owner. 
  • You can withdraw more than the minimum required amount. 
  • Your withdrawals will be included in your taxable income except for any part that was taxed before (your basis) or that can be received tax-free (such as qualified distributions from designated Roth accounts).
  • Source:  https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-required-minimum-distributions

• I understand the other benefits that I may be able to continue in retirement.
  • Health insurance that is supplemental to Medicare
  • Dental insurance
  • Life insurance
  • Employee discount
  • Credit union membership

• I contribute to personal savings and investments to supplement my retirement income.
  • Preserve principal dollars
    • Savings accounts
    • Money market accounts/funds
    • Certificates of deposit (CDs)
    • Treasury bills
    • Municipal notes held to maturity
  • Maximize current income
    • Medium/long-term bonds – corporate, government, municipal
    • Common and preferred stocks
    • Mutual funds with income objective
    • Exchange-traded funds with income objective
  • Growth of principal dollars
    • Common stocks
    • Zero-coupon bonds
    • Mutual funds dedicated to capital growth
    • Exchange-traded funds
    • Real estate
    • Bonds bought at discount prices

• I understand the impact of the economy on my retirement lifestyle and adjust accordingly.