On this podcast episode, Miguel Gonzalez shares a few steps you may wish to take to potentially make the transition to retirement easier.
Welcome to Cortburg Speaks Retirement Podcast
with Miguel Gonzalez, MBA, AIF®, CPFA®, CRC®
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Welcome to Cortburg Speaks Retirement
An audio podcast about investing in the stock market, financial planning, money management and retirement planning. Each Wednesday, we help investors at all stages of life learn how to potentially grow and preserve their money from first job through retirement.
Now here is your host, Miguel Gonzalez.
Good morning and welcome to the CORTBURG SPEAKS RETIREMENT audio podcast.
On this week’s audio podcast, I discuss 5 steps older workers can take to make the retirement transition easier.
Many workers have been dreaming of retirement since they first entered the workforce. However, once this retirement date draws near, the prospect of giving up your primary source of income may be nerve-wracking, even if you've diligently saved and planned. Below, we discuss a few steps you may wish to take to potentially make this transition easier.
1. Draft a Retirement Budget
Even if you haven't adhered to a strict budget during your working years, having a budget during the early months of retirement may be crucial—spending more than you've planned or failing to anticipate certain large expenses may impact your future retirement income. The last thing you may want is to be forced to withdraw from your retirement accounts during a market dip.
Fortunately, many workers receive a slightly larger final paycheck, especially those who have built up significant vacation or PTO balances during their working years. This bonus may help make the adjustment to a W-2-free lifestyle a bit easier.
2. Review Your Healthcare Options
If you're retiring after age 65, you may qualify for Medicare—government-sponsored healthcare coverage available to those who have paid FICA taxes during their working years.
If you're retiring before age 65, you may be able to continue your employer's medical coverage through COBRA for up to 18 months after retirement.1 But if you don't like your current medical coverage or don't want to pay the costs associated with COBRA, you may be able to purchase a Health Insurance Marketplace plan through your state's ACA marketplace.
And if your spouse is still working after you retire and has access to health insurance through their employer, you may be able to be added to their policy. Retiring generally qualifies as the type of "life event" that allows your spouse to make changes to their policy outside the open enrollment period.
3. Decide What (if Anything) to Do with Your Retirement Accounts
One retirement decision you may not consider is whether to keep your employer-sponsored retirement accounts in place or roll them over into a self-directed account like an IRA. There are pros and cons to each approach.
4. Rolling Your Savings Over
If your retirement account doesn't have investment options or has higher-than-average fees, rolling over to an IRA may allow you to invest in lower-cost options without incurring any taxes or penalties.
5. Keeping Your Accounts As-Is
In some situations, it may make more sense to keep your accounts in place, especially if you've retired early. Workers who leave their jobs after age 55 but before age 59.5 may be able to withdraw funds from the 401(k) or 457 account from the job they just left.2 Under this "Rule of 55," those who retire a few years early may be eligible to take the same penalty-free withdrawals that would otherwise be available only after age 59.5.
Make sure to visit our website, www.CortburgRetirement.com. Our site is filled with educational videos, eBooks, publications, and financial calculators designed to help you learn more about your finances. As you search our site, send us a note regarding any questions you may have about any particular investment concepts or products. We will get back to you quickly with a thoughtful answer.
This is Miguel Gonzalez, Certified Retirement Counselor (CRC) and Managing Partner, with Cortburg Retirement Advisors signing off for this week’s educational podcast.
Opinions expressed are subject to change without notice and are not intended as investment advice or a solicitation for the purchase or sale of any security. Please consult your financial professional before making any investment decision.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax advisor.
CRC conferred by The International Foundation for Retirement Education.
Securities offered through LPL Financial. Member FINRA/SIPC. Investment advice offered through Private Advisor Group, LLC, a registered investment advisor.
Private Advisor Group, LLC and Cortburg Retirement Advisors, Inc. are separate entities from LPL Financial.
Investing involves risk including possible loss of principal.