Connecticut Money: One year 'til retirement....

This article was published in the New Haven Register on August 29, 2021.

If your goal is to live among palm trees and sandy beaches a year from now, I have a
homework assignment for you. I would recommend gathering information on your current
financial situation such as spending, housing, debt, savings, investments and health care
needs over the next few months.

Spending-wise, it’s a great exercise to go through your credit card charges and checkbook to
look for recurring costs and bills that may be lower in retirement. For example, you no longer
may have major wear and tear on your automobile if you have been commuting long
distances for work. In addition, your car insurance costs may decrease as your mileage
subsides. Be sure to include your significant other in this review process as this exercise
may help to rein in a loved one who is a chronic free-spender!

In regard to housing, will your costs remain the same or will they decrease due to downsizing
or moving? If heading to a warmer climate, estimate whether your Northeast heating bills will
be offset by the air-conditioner that runs around the clock down in the sunbelt. New location
specific expenses may pop up, such as the exterminator that visits regularly. To get a handle
on things, I would make it a point to ask your friends about their experiences and costs of
living in the areas in which you’re interested. In the very least, you usually can find blogs or
forums offering opinions and cost of living for most areas in the country.

Debt threat: It’s not ideal to enter retirement with a lot of debt. Having the burden of ongoing
payments can become especially uncomfortable during downturns in the stock market. When
it comes to taking on a mortgage or other debt in retirement, be sure to have your financial
professional or CPA in the loop before taking on new debt.

Get to know Medicare! One of the mysteries of retirement planning is learning about
Medicare supplements and how these coverages work. Supplements pay some of out-of pocket costs that Medicare Part A and B don’t cover, such as deductibles and coinsurance. You will have a wide array of choices available. Medicare supplements are portable if you are
out of state and coverage benefits are standardized among providers. The biggest challenge
will be sorting through the coverages to find one that best suits your personal needs. For
example, you will need to decide whether to purchase an optional Medicare Part D
prescription drug plan. This coverage offers more complete prescription coverage than the
basic coverage that Medicare offers.

With one year or less to go before your retirement, financial planning is your friend. Be sure
to run realistic projections that include after-tax returns on investments along with Social
Security, pension and any part-time work income you may receive. Don’t forget to include
inflation adjustments and the possibility of a long-term care stay. Ideally, you will have your
certified financial planner or CPA run the numbers along with your input!

Finally, be sure to review and reposition investment assets in the context of your financial
plan since savings and investments are a crucial part of every retirement income strategy.
Once you complete your homework, we hope your newfound clarity allows you to relax when
enjoying your next stage of life in retirement!

For podcast fans, please tune in to our fun financial podcast “unfettered wealth” from your
favorite source. You can also pull up our podcasts on YouTube. Enjoy!