QuickTips: If Retirement Is Right Around The Corner

Decide when to begin receiving your Social Security retirement benefits. To get an estimate of your expected Social Security retirement benefits, log on to the Social Security Administration’s Internet site (www.ssa.gov) to complete a Request for Earnings and Benefit Estimate Statement . Or call (800-772-1213) to request this form by mail.

If you retire before age 65, you’ll have to decide whether to take a reduced Social Security retirement benefit at age 62 or after, or wait until you’re 65 to collect your full benefit. For example, retirees born before 1937 receive 80% of their full benefit at age 62, and this benefit remains reduced for the rest of their life. Whether you should take this option depends on your health status, family longevity history, and your personal and financial situation.

Make informed pension decisions. If you're covered by a traditional pension plan, request your individual benefit statement and a summary plan description for detailed information about your benefits. When and how you decide to collect your pension benefits is a serious decision, so be sure you understand all the options.

Typically, you have a choice between a lump-sum payment, or one of several types of annuity plans that provide a guaranteed monthly income over your lifetime or over a specified period, including survivor options for your spouse. For married couples, the joint-and-survivor annuity option automatically goes into effect unless both spouses reject it in writing. The decision to waive your right to this joint-and-survivor annuity is irreversible, so get complete information before making any decisions. For example, if you reject the survivor's pension, your spouse may lose any benefits that go with it if you die first, such as cost-of-living adjustments or health insurance benefits.

Estimate your retirement expenses. The standard advice is that for each year in retirement you’ll need about 70% to 80% of your inflation-adjusted pre-retirement gross income, or more accurately 70% to 80% of your pre-retirement expenses. It’s okay to use these estimates if retirement is a ways off. But if retirement is fast approaching, these one-size-fits-all formulas may leave you short, especially nowadays with longer life expectancies and more active retirement lifestyles. Keep in mind that even if your kids will be out of the house and your mortgage will be paid off, other costs will increase to offset these savings, such as medical, dental, and property-tax bills.

What's more, travel, recreation, and entertainment costs may go up, and you may also have big-ticket expenses, such as gifts to family or charities, care for aging parents, or home repair or remodeling costs. If anything, overestimate for unexpected spending, and factor in annual increases in the cost of living between now and the time you retire, as well as throughout retirement.

Review your life insurance coverage. Make sure your current life insurance coverage meets your needs, then evaluate your future needs with an eye toward retirement. If you have a term life insurance policy and you'll still need coverage, check into how much longer you'll have the option to renew, or the option to convert to cash value coverage without having to provide evidence of insurability. If you have a cash value life policy, you have several options, including:

• keeping your policy in full force

• surrendering the policy for the cash value

• borrowing against the cash value

• converting to a paid-up policy for a reduced level of protection

• using the cash value to purchase an annuity to pay you an income in retirement

Before you make any final decisions, carefully consider your family's needs and get information about the tax implications of each option. Also ask your insurer for an in-force policy illustration to see how your policy is projected to perform in the future.

Plan for your health insurance needs. Start looking into Medicare, as well as Medicare supplement insurance, called Medigap.

If you’re retiring early, look into other health insurance options since Medicare doesn't kick in until age 65. If you’re one of the lucky ones, your employer may provide health insurance to retirees under age 65, even if you have to pay part of the premiums. If not, you can continue your employer coverage for 18 months, at your expense, under the federal COBRA provision. It’ll cost you up to 102% of the premium, but at least you’ll still be getting group rates.

If this doesn’t carry you through to age 65, you’ll have to shop around for coverage on our own, which can be expensive. Look into coverage options through any memberships you have in professional or fraternal organizations. Or contact your state’s consumer health insurance counseling and advocacy program (HICAP). You can get the number for your state’s HICAP from the Eldercare Locator 800-677-1116.

Consider your possible long-term care needs. Neither Medicare or Medigap pay for most long-term care, and to qualify for Medicaid you have to spend down most of your financial resources. Long-term care insurance, which helps cover nursing home care and some home care, may be an option. According to the National Association of Insurance Commissioners, whether you're a candidate for coverage depends on your age, income, current health status, and overall retirement objectives.

Get your estate plans in order. Make sure your will is up-to-date, and if you have special concerns or substantial assets, consult an attorney about whether any of the different types of trusts may be appropriate for you. In addition, prepare for the possibility of incapacity by creating or updating a durable power of attorney for finances, a durable power of attorney for health care, and a living will.

Invest wisely. Managing your retirement fund can be a job in itself, so brush-up on the basics of money management and investing. While you may be quitting your job, your money is going to have to continue to work for you. So maintain a well-diversified retirement portfolio, and keep a portion of your funds in the stock market to help you stay ahead of inflation. Even once you're in retirement, financial experts typically advise retirees to keep some of their money in stocks or stock mutual funds.

Plan how you’ll take your retirement distributions carefully. If you'll be taking a lump-sum distribution from your employer-sponsored retirement plan, carefully consider the options for how and where to invest it. Equally important, carefully plan how much money to withdraw, and how often, from all your retirement investments. Use one of the many retirement software programs or ask your financial advisor to help you make these calculations.