The Six Essential Steps of Retirement Planning

It’s now 2019! A new year has dawned upon us and every year, it is a tradition to create new year’s resolutions. Have you ever considered a stress-free retirement plan as one of your resolutions?

Folks planning their retirement often encounter difficulty making decisions not because they lack funds but because they lack information. And, when information isn’t accurate or is too complicated, the planning process gets more expensive and time consuming.

You have already mastered the very first step–-realizing you need a plan. Here are the six steps to help you create that plan easily.

Step 1: Protect Yourself From Unaffordable Medical, Vision, and Dental Expenses During Retirement

Medicare normally covers 80% or less of medical expenses when people have minor illnesses or sudden hospital stays. You’ve probably already protected yourself from this risk by signing up for either a Medicare supplement or Medicare Advantage plan and perhaps a dental/vision plan.

Step 2: Assess Your Disability Risk

Together with your expert personal benefits manager (PBM), individuals still working after age 65 can assess potential risks of becoming disabled and form a plan to cover expenses in the event it happens.

While many health emergencies happen sporadically, many others can be seen before they arrive. Unexpected accidents, however, can’t always be planned for.

The biggest consideration for you should be how this kind of event would affect your income. If you would be facing large financial pressure if you are out of work for a while, you are taking a big risk.

An accidental disability insurance policy can help cover gaps that traditional policies cannot or will not cover. For the cost of what many people spend on soda, candy and coffee at convenience stores each day, you could blanket your life with something that pays you an income if you get hurt and can’t work.

Step 3: Secure a Guaranteed Lifetime Income

Longevity insurance, which is essentially a self-funded pension, can offer an extra level of income protection by guaranteeing a lifetime income flow. Investors typically purchase a longevity annuity near retirement age. After paying into the annuity, often in one lump sum, you wait until the payout date, then receive monthly payments.

If you’ve already put away money into a 401(k) or IRA, you can use some of that money–up to 25% for a maximum total of $125,000–to purchase a longevity annuity. In order to avoid a tax penalty, you just have to start collecting payments by the age of 85.

The benefits of longevity insurance are obvious. They provide security in case you live longer than planned or have unexpected expenses. They’re also a good backup plan in case Social Security ever changes. In recent years, there have been signs from Washington that means testing or other methods of reducing Social Security payouts could be coming.

Step 4: Plan for Long-term Medical Costs

With healthcare expenses rising each year, it’s essential to plan for long-term medical expenses not covered by traditional health insurance or Medicare.

Long-term care (LTC) insurance, unlike the health insurance coverage you’re accustomed to, covers various supports and long-term services, such as custodial and personal care. Coverage may be used in community organizations, assisted living facilities, and even applies to home health care.

Because Medicare will not cover normal activities of daily living and only pays for rehabilitative or skilled care, long-term care insurance may be the most important investment in your future health care you’ll ever make.

Step 5: Create a Living Will

Your living will appoints someone to make medical decisions on your behalf if you are unable to communicate your wishes. Most living wills are limited to the desire for, or refusal of, medical treatment should you become terminally ill, become permanently unconscious, or sustain a major injury.

Step 6: Complete Your Legacy Planning

Legacy planning involves naming the executor of your estate, naming the attorney or loved one who will probate your will, and making sure your will and trusts are set up as you wish.

To learn more about each step in detail, here’s a free copy of The Six Steps of Retirement Planning: How to Retire with Peace of Mind and Financial Security: http://medigapadvisors.com/pdf/retirement-planning-program-sr.pdf

To your health and wealth,

Wiley P. Long, III
President – MediGap Advisors