Five Retirement Preparation Questions

What’s important to you?  “Your money or your life. You can retire early if you wish, giving you a more lively life, but the trade-off might mean less income. If you work longer, you’ll have more time to save and your savings will have more time to grow. What’s more important to you, time or money? Kick it around some and come up with a retirement-date decision you can live with.

What is your net worth? Gather all your retirement account statements, bank accounts, etc. How much to do have to support you?  A safe withdrawal rates is probably around 4%, allowing you to reinvest enough to account for inflation. Do your own your home free and clear? If not, redouble your effort to pay it off. Living debt-free is true freedom, because your income goes so much farther.

What is your Social Security or other pension benefit? The best way to estimate your Social Security benefits is to go to If you have a government or corporate pension, pull that information together. These will provide for basic retirement expenses and more, depending on your lifestyle.

What do you know about paying for healthcare?  You sign up for Medicare at age 65, but then what happens? Most people aren’t aware that the Part A coverage is included, but the Part B premium is $121 a month, and it comes out of your Social Security check. Part B is the section that covers doctors and out-patient treatment. It also has a 20% co-pay, with no limit. Therefore it is a good idea to purchase a Supplemental (ala carte) or Advantage (all-inclusive) plan to protect your family. Part D prescription drug coverage is also very useful and costs $30-40 a month depending on your needs and location. Vision and dental options are also worth considering.

How involved do you want to be? Are you going to do your own planning and investment management, or hire someone to do it for you? Either way, you need to gain a basic understanding of how things change when you near retirement and what new risks you face. At least you need to know enough to recognize good advice from bad advice. To do this you will have to go beyond popular magazines and websites. If you’ve ever been interviewed by journalists, you know that most do not investigate a story; they have a preconceived notion that they seek quotes to justify. If you choose to manage your own affairs, there is much to learn, and sources can be unreliable.

If you’re married, you also need to consider your spouse’s level of engagement. If you are the money person, you will need to partner with your partner. It is cruel to leave an unsophisticated spouse to figure it out by themselves and the cause of unimaginable anxiety. If you need to transition to a professional, do your research so you can explain what kind of assistance they will need when you are gone, and how they can go about finding the appropriate resources.