10 KEY PLANNING STEPS YOU SHOULD TAKE BEFORE RETIREMENT THAT MAY SAVE YOU FROM BANKRUPTCY IN LATER YEARS!

     Mature adults past age 45 or 50 begin realizing they are nearing retirement and begin taking this impending event more seriously. It would have been easier if these individuals had begun planning for retirement in the 30s but often pre-retirees fail to plan early. Time can be your friend if you begin a small retirement savings early in life because a few dollars can grow vertically into a huge sum of money over a 20 or 30 year period of time, if invested in growth funds. When an individual waits until the last minute to address the important issues of retirement, time can be an enemy because you have less time to prepare. Whatever your pre-retirement time remaining, you need to be aware of 10 important retirement planning issues. Remember, you will only get one opportunity to do things right. After you retire, it is too late to go back and change your retirement plan. You may have to live with your plan to age 100! Your employer sponsored FREE "EAFP" support services can be a tremendous help as you plan for this new event ahead in your life - retirement.

1. Retirement Income: Retirement is one of the most important financial decisions you will ever make. Mistakes can bankrupt you in later life. Five years before you retire, you should be carefully reviewing your long-term financial situation and begin running a retirement cash-flow forecast. Most people have no idea what their personal savings and investments will provide. Completing a monthly budget and income forecast is critical. You should call ICA and ask for a retirement saving forecast. This is a computer projection of current retirement funds and current savings to determine if you are on track for a safe retirement. Remember, to get an accurate picture of your current situation, you must look at federal programs, employee benefits and your own personal savings as your three sources of retirement income.

2. Early retirement is another consideration: The decision to retire early should be done based upon gathering all the financial facts and running a computer forecast of monthly income on the computer. Unless you know what you have in Social Security, employee retirement plans (if any) and run a forcast of your personal retirement funds, you simply cannot make an informed decision. Putting the "three legs of the financial stool" together into a monthly income cash flow to age 100 is the only way to make a sound decision. If you are wondering about early retirement you can get help by asking for a free retirement review.

3. Retiree Health Insurance: Early retirement or retirement requires that you carefully review your health insurance coverage. You cannot retire early unless you have medical coverage from the time you retire until Medicare is available at age 65. Disability is an exception that allows you to begin receiving Medicare as early as age 60. Another exception would be the fact that your spouse has health protection with you as a dependent. Be very careful and make sure you have protection. Have an independent review of your health insurance before making a decision. Health costs can bankrupt you quickly.

4. Retirement Planning: At least one year before you retire you will need to get with a retirement planner or Certified Senior Advisor and complete a comprehensive retirement plan. The advisor should review every issue discussed on this site. They should thoroughly review a plan for income, investment strategies, insurance needs, long-term care protection, asset protection, tax related issues, pending capital gains taxes, estate taxes, living trusts, wills, powers of attorney, living wills, distribution of the estate at death, final plans, special circumstances with the heirs, business estate plan, employee benefits and all other pertinent retirement planning issues.

5. Lump sum distributions and IRA roll-over opportunities: You should consider a trustee-to-trustee transfer of employer retirement plans. One serious exception to transferring retirement funds to an IRA would be if you have a lawsuit underway, expect to be sued for any reason or should you have a tax problem with the IRS. If you have liability problems, and IRA may have less protection than employee pension assets. Very seldom is it recommended that you take a guaranteed monthly income when you retire because a fixed income will decline in buying power as the years go by. (Request our ICA free report, "8 Mistakes Retirees Make That Can Ruin Their Finances" to learn more about retirement planning).

6. Long-Term Care Protection: One of the biggest risks retirees have following retirement is the cost of medical care and especially long-term care regarding major health problems. We talk to many seniors every year who are scared to death they will run out of money and leave no inheritance for their children because of a heart attack, cancer or other disability. You should allocate some of your retirement funds for long-term care protection.

     Better products on the market now have no annual premium, you earn a current interest rate, you don't lose the fund if you do not use them and your children get all the funds at death, if you never require professional care. These new programs are also a lot better than trying to "self-fund" your own long-term protection. Most people are medically bankrupt within two years when they try to self-fund. You risk your home, investments and other non-exempt assets when you try to self insure because the government will make you spend down your savings before Medicaid will pay for your care.

     You will need to plan early to save thousands of dollars in premiums to get this new protection. Wait until you are older and your premium costs will increase 10% - 15% every year. Waiting does not save you money. Planning ahead for your long-term care may save you money and maybe even save your entire estate.

7. Your home is another important issue. Is your home too large for your needs? Are you considering the purchase of a resort property for a second home? Are you in good health and can you keep up with the maintenance of the property? Should you scale down your residence now to cut costs and free up funds for retirement? These are all important decisions. The purchase of a vacation property or moving to a smaller residence should be done slowly and carefully by taking a year to look at all the options. Too many people retire and get a large retirement lump sum and begin spending it on a motor home, second home or other non-necessities that could cause a cash shortage in later life. Excessive spending at retirement from taxable retirement funds will also cost you a lot of taxes and could leave you destitute during your elder years.

8. Retirement Activities: Part time work, hobbies, sports activities and community service should be considered to retire successfully. In our employee retirement planning programs throughout the United States the presenter takes out a large calendar and tells the audience they are going to retire next Friday. The presenter then asks the audience to help fill in the daily activities for the coming week. Most audiences "bog down" by Wednesday or Thursday of the week during this exercise. Planning your activities is important for peace of mind and feeling of self-worth. It is also important for married spouses so that you do not get in each other's space following retirement. We have witnessed divorce six months after the retirement of both spouses. What a disaster to retire and not have activities to fill your time so that both spouses are fulfilled and happy being retired. When both spouses do not have their own separate activities, the non-occupied retiree will tend to spend too much time "in the face" of the spouse. This situation spells problems. Make sure you have a hobby and activities planned or you may lose your zeal for life. Make sure this does not happen. If you have little to do, ask the ICA how you can help promote the information that is on this web site to others! Helping people plan is a rewarding activity.

9. Employee benefits are important to understand: Get with your company personnel or human resource department and carefully review your retirement options. If you are with a company that has not been able to fund retirement plans or retiree health insurance and your spouse does have options for you, review those options carefully. Visit with your company and thoroughly understand what you have and what you will need to build a secure retirement.

10. Seek financial advice: There are no dumb questions. Having the right answers is too important to procrastinate. Get with a financial advisor (two different ones preferably) so that you can get a "second opinion" on your decisions. Don't think you have all the answers regarding retirement because you do not have experience until after you retire. Avoid mistakes by seeking professional help in advance of retirement to review employee benefits and your personal planning needs. Remember, you company can inform you of your benefits but they do not assume the liability of giving you personal advice. You are responsible for your own financial future and your retirement planning. Read and study the information on this site. Request the free reports and computer analysis programs and use the ICA volunteer program. ICA will coordinate your needs with the right professional volunteer to assist you. There is no charge or obligation. This free service is your Employee Assistance Financial Program (EAFP).

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