Creating a Financial Plan
Ninety percent of Americans leave the workforce by the age of 75*. Are you one of them?
Whether you’re taking classes, traveling the world, or spending time with family, you can make the most of this decade if you secure and simplify your finances first. Here are three ways to get started:
1. Take Your Required Minimum Distributions
Turning 70 marks a major transition for many retirees. Starting at age 70½, you generally have to begin taking required minimum distributions (RMDs) annually from your tax-deferred retirement accounts such as 401(k)s and traditional IRAs. The amount you must withdraw — which is generally determined by taking your account balance at the end of the preceding calendar year and dividing it by a distribution period from the IRS’s “Uniform Life Table” — will be considered taxable income.
2. Review Your Medicare Insurance Coverage
When you became eligible for Medicare, you may have purchased a supplemental Medicare insurance policy or a Part D drug plan to cover gaps and help limit health care expenses. “If you still have the same coverage you bought when you turned 65, it might be time for a review,” says Hans Scheil, a certified financial planner, CEO of Cardinal Retirement Planning, and author of The Complete Cardinal Guide to Planning for and Living in Retirement.
Make sure you still have the kind of coverage you want at a price you’re able to pay. Some things may have changed since you first bought your policy. Do you have any new health issues? Are your providers still part of the plan network? Have costs increased markedly?
3. Simplify Your Financial Life
Even if you pride yourself on your organizational skills (and feel confident about your current asset allocation), now is a good time to consider streamlining your various accounts and policies if you haven’t already done so.
*LIMRA Secure Retirement Institute analysis (2016).
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.