Houston Estate Planning and Elder Law Attorney Blog
Before you tell HR what your final day of work will be, there are more than a few details that you need to cover to prepare for taxes, make the most of any potential benefits and start retirement on the right foot.
If there’s a retirement season, it’s spring or early summer, when it feels like it did when the school year ended! But before you start planning your retirement party, Kiplinger advises you to take these steps first, as explained in article, “4 Actions to Take If You’re Retiring in 2017.”
Make sure to get the match. Your employer may “match” and/or offer “profit-sharing” contributions to your 401(k) or other retirement plan. You typically must be actively employed on the date of payment in order to receive these funds, so be sure that you understand the terms before setting your final work date.
You may want to up your personal contribution percentage to help you reach your annual maximum. Employers frequently limit the amount you can contribute to your plan from each paycheck, so you may need to increase your contribution percentage long before you retire to max out.
Review Your Risk Profile. Retirement is a major change in your life. It’s a transition from saver to spender, where you’ll start spending your retirement nest egg. Rebalancing your investments is critical to keep things in balance when you retire.
Don’t keep too much of your portfolio in riskier assets like stocks, or you’ll be vulnerable to a potential market downturn.
Don’t Underpay Your Taxes. When you retire, by default, taxes aren’t withheld on your retirement income. You have to opt in to have taxes withheld from your Social Security benefits, pension benefits, and IRA or 401(k) distributions. If you don’t have taxes withheld, you’ll need to pay estimated taxes.
Plan This Next Phase With Your Spouse. People often overlook planning how they’ll spend their time when they retire. After the novelty wears off, what will you do with your time? Will your spouse keep working when you retire? Do you both plan to travel, spend time with family or volunteer in the community? Create a plan that works for both of you.
Reference: Kiplinger (May 2017) “4 Actions to Take If You’re Retiring in 2017”