By Jocelyn Mijares-Jalijali, ChE ’65
Retirement can be the most exciting stage of your life, the time to do everything you are passionate about. It can be a continuation of your old life working on projects there was never time for before, spending time with your children and your grandchildren, and going on family vacations. Or for the highly adventurous, it can be a new life discovering exciting new hobbies and interests beyond their wildest imagination. It is important to have preconceived retirement goals. It will help you prepare financially, mentally and physically. Your retirement goals will dictate your lifestyle which will dictate your financial needs and wants, your template for your retirement savings program.
Some people can adjust to retirement more readily than others. If you are one of those too involved with your career, you might have to ease into retirement by gradually cutting your work hours until you are completely weaned, or perhaps, you just have to continue working of your own volition. We are always excited about leaving the day-to-day grind, but we do not think of not having the structure of being employed for an indefinite period of time. After all, you can only do so much golfing or fixing around the house. Consider starting a new career for more meaningful and productive days.
Volunteerism during retirement can greatly enhance your sense of self. Set aside time to help others by sharing your expertise in your previous profession. Get involved in special interest group such as political, civic, or religious, working for a cause to make a difference. Or it could be as simple as spreading acts of love and charity to disadvantaged people, and to those who are alone and lonely.
There is no time to be bored during retirement. Some things in life are free or discounted, especially for seniors. Check out your local Senior Center, library and churches for State and community funded senior activities, focused in improving health and well-being. They offer informative seminars, exercises, yoga, line-dancing, subsidized lunches, free movies, bus trips, free tax-service, free medical testing, and the list goes on and on. These places are also where you can get involved in social groups.
Maintain your whole well-being:
1. Our brains have to be stimulated to keep it going. If you don’t use it, you lose it. Shoo away the onset of Alzheimer’s. Do any activity that will keep your thinking process flowing: read, learn a new language, play the piano, dance, do crossword puzzles and mental aerobic puzzles.
2. Maintain physical health. Have annual medical checkup, taking note of your blood pressure, blood sugar, and cholesterol numbers. Have you manual Mammogram and other pre-cancer screening, especially if you have a history. Maintain a healthy weight, exercise, eat healthy.
3. Maintain emotional health. Have friends and family as support system so you’ll have someone to talk to, avoiding bottled up feelings. Keep a journal of your thoughts and feelings to help you relax when you are upset. Always think positive. Try to focus on the good, learn to accept things that you cannot change, and view problems as opportunities. Laugh often. Hug someone. And most importantly, start and end your day down on your knees thanking God for all your blessings.
My best FINANCIAL tip: Be debt-free before going into retirement.
PRIVATE RETIREMENT FUNDS:
1. Crunch numbers to determine how much you will need to support your retirement lifestyle. Prepare a written future budget showing cash flows and cash outflows. If your cash flow exceeds your cash outflow, you are off to a good start. Determine your net worth by creating a balance sheet listing assets and debt. Since most retirees live off part of their savings for retirement, it is best to know your bottom line and factor it in your retirement equation.
If you are retiring at 66, add a longevity factor of 20-30, even 40 years based on your health and your family genetics. Divide your retirement fund by that number to determine how much you can withdraw every year to make your money last.
Use a retirement calculator supplied by the Social Security Administration and your Investment Institution to crunch numbers. Check out www.ssa.gov/planners/calculators.htm, for one.
2. Start building up early, but if you started later and are nearing retirement, start beefing up by maximizing your 401K contributions, IRA’s and Savings Accounts. These are good tax-shelters. Spouses who do not work outside the home may be eligible for spousal IRA. For maximum contribution, read more at www.irs.gov.
3. Diversify: Don’t put all your eggs in one basket.
Consider investing your assets in stocks, some in bonds, and some in cash savings accounts. The amount in each category depends on how long before your retirement. As you move closer to retirement, stay more on the conservative side. However, during retirement, it is a good idea to allocate a certain portion in a high-yield fund. People are living longer nowadays, your money has to grow. You might want to hire a Certified Financial Planner to help you invest, for a fee of 1-1.5% of your investment. However, you should stay pro-active; know how and where your money is being invested.
4. Once you have saved it, don’t touch it! If you withdraw from your retirement fund before 59 ½, you will pay a 10% penalty plus taxes based on your taxable income. If you make a loan from your 401K, you will be paying back your loan with after-tax money. When you take that after-tax money out during your retirement, it will get taxed again.
5. Learn about your employer’s and previous employer’s pension or profit-sharing plans. Know what your benefit is worth. Before you change jobs, find out what happens to your pension. Find out if you are entitled to benefits under your spouse’s plan.
6. Learn to strategies making withdrawals from your retirement fund during retirement. Always consider how it will impact your tax bracket (www.irs.gov) It is advisable to maintain an emergency or contingency funds in an interest bearing savings account, or money market account to draw money from when the market is bearish, or to avoid going to the next higher tax-bracket. Money taken out of savings accounts is not considered taxable income.
7. Employee Stock Options: educate yourself on how you can manipulate the market to maximize your holdings. Consider capital gains tax when selling stocks, and broker fees, where it applies.
SOCIAL SECURITY RETIREMENT BENEFITS
Six months prior to your actual retirement date, contact the SSA for an estimate of your entitlement. When you have decided on your retirement age, you should file for your SSA application three or four months prior to your actual retirement. You can do it online, or by calling SSA 1-800-772-1213 to schedule an appointment with a representative in your local SSA office. Be vigilant to make sure you are getting the entitlement due you. Take an educated and active part when it comes time to collect your Social Security benefits. Even if you are already collecting Social Security checks, learn how to make sure you are getting the correct amount and how you can get even more in the future.
Read the SS Benefits “TIPS” and “TRAPS” written by a Sue Stevens for Morning Star at: http://finance.yahoo.com/retirement/article/102067/Social_Security_Tips_and_Traps
I add to these “TRAPS” items:
- If you are collecting retirement benefits from the Philippines, it will be subtracted from your Social Security benefits here in the US.
MEDICARE:
If you were born between 1943-1954, your full retirement age is 66. However, you become Medicare eligible at 65. Three months before your 65th birthday, and you are not yet collecting Social Security benefits, contact SSA to sign up for Medicare even if you don’t plan to retire at 65. If are already collecting your SS benefits, you are automatically enrolled in Medicare Part A and Part B. However, since Part B requires paying a premium, you have the option of turning it down.
Medicare has 4 parts:
Part A: Hospital Insurance, inpatient care, nursing care from hospital
Part B: Medical Insurance, doctor’s fees, medical procedures. You pay the premium to SSA.
Part C: also known as Medigap, which covers the difference not covered by Parts A and B. You are responsible to choose the insurance company and pay the premium
Part D: Prescription insurance, which pays for prescription drugs covered in the program. You are responsible to choose the insurance company and pay the premium.
It is important that you do comparison shopping of the different health insurance companies available in your State. SSA will send you a publication listing insurance companies and their premiums, part of a package you receive to welcome you to Medicare.
If you are still covered by your employment’s health
insurance, you don’t have to buy into Part B yet. However, when your employment
health insurance stops, you have to sign up with Medicare Part B before the
enrollment date, or you will end up having to pay a higher premium.
For basic information about what Medicare: www.medicare.gov Phone: 1-800-MEDICARE
Read Medicare SSA Publication No. 05-10043, April 2010 1CN 46000 and for detailed Medicare information: Medicare & You, Publication No. CMS-10050.
INSURANCES
Life Insurance: Review your life insurance needs. If your spouse will have enough money in case anything should happen to you, or if you no longer have any dependents or debts, and have enough money for your funeral, chances are you don’t need one.
Health Insurance: When your company-sponsored health insurance stops, you will need to get a Medigap coverage, Part C. and Part D for prescription.
Long-Term Insurance: pays for your nursing home expenses. Advisable to have for people with substantial nest-egg. Medicaid only pays the bill for low-income people. With $70-75K annual nursing home cost, financial resource can be easily depleted. The premium is be significantly lower if you start your coverage at a younger age.
UPDATE YOUR WILL AND TRUSTS, DURABLE POWER OF ATTORNEY AND LIVING WILL.
HAPPY RETIREMENT, BABY BOOMERS!
Ray Zipagan award
At
the USTEAA(USA) holiday party last December 2009, the association presented Ray
Zipagan with a plaque of appreciation for his great contributions and
outstanding leadership as president for 2008-2009.
Congratulations, Ray!
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