Your financial situation changes when you no longer go to work and receive a paycheck.
You are thinking about retirement and all it entails.
You are acting wisely.
Because of your forward thinking, the extra costs discussed in a recent The Washington Post article will likely be less of an issue for you.
The article is titled “It takes a lot of work to be ready to retire. Don’t forget these things.”
What are these costs?
Medicare.
You are personally responsible for your own enrollment in the Medicare program—even if you delay Social Security.
When do you need to do so?
Age 65 is the age required for you to enroll. You can do so from three months before your birthday to three months after.
Is it really important?
Yes.
By failing to enroll, you will accrue a 10 percent penalty for every 12 months you neglect to do so.
At 24 months, there will be a 20% penalty for failing to re-enroll.
Yikes!
In short, you will be penalized for not enrolling for Medicare.
Period.
Health-Care Costs.
Health care costs do not disappear magically in retirement.
In fact, studies show the average health care costs for a retiree is $5,000 per year or about $250,000 total for a retired couple.
From where are these expenses coming?
A few examples include prescription drugs, long-term care and dental expenses.
The dental costs can surprise many because they are unaware dental is not covered by Medicare.
Major Purchases and Repairs.
Entropy is a physical law.
What is new becomes old.
Many of your large purchases will break down and need to be replaced.
Set aside money for these.
In addition to emergencies, you will likely have celebrations.
Be sure you have money for any wedding, graduation or birthday gifts.
Planning for a Long Life.
People are living longer.
What will you do if you are one of these individuals who beats the actuarial curve?
Will your money last from until you are 90 or older?
Remember, if you are this old, you will need long-term care at some point.
Estate Planning.
Whether you are a prince or pauper you will need to prepare an estate plan.
Work with an experienced estate planning attorney to create at least a will, power of attorney and health care directive.
After this is done, continually update beneficiary designations as necessary.
So, how do you find an "experienced" estate planning attorney?
First, ask around. Friends, family and other professional advisors are trustworthy sources.
Second, conduct an "organic" search on "Google" for "estate planning" near you (e.g., "Estate Planning Anytown MoKan").
Third, either way, verify! Check out the education, experience, ratings and client reviews of any attorney before you contact him or her.
How?
Two helpful online resources are just a mouse click away to assist with your due diligence: Avvo.com and Lawyers.com.
Check any Avvo ratings, client ratings/testimonials and attorney endorsements on Avvo.com and any "peer ratings" by judges/other attorneys and any client ratings/testimonials on Lawyers.com.
In fact, I use both of these services to thoroughly vett attorneys before referring members of our "client" family for legal help in other areas of law or for matters in jurisdictions outside Kansas or Missouri.
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
Reference: The Washington Post (October 15, 2016) “It takes a lot of work to be ready to retire. Don’t forget these things.”
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