Before you retire, answer four questions: How will I cover my health care? Where's my money at? How long is my money going to last? And what happens if I or my significant other needs long-term care? Signing up for Medicare is one step. These questions help you look at how retirement will actually work.
How will I cover my health care?
Start with when your current health coverage will end and what will replace it. If you plan to retire before you're eligible for Medicare, you'll need to look at coverage for that gap. If you're eligible for Medicare and still working, check how your employer coverage affects your enrollment decisions before making a change.
Don't choose a plan just because a friend likes it or the premium looks low. Your doctors, prescriptions, and out-of-pocket costs may be different from theirs.
Before comparing coverage, write down:
- The doctors you want to keep seeing and the prescriptions you take.
- What you expect to pay each month, plus what you could owe when you need care.
- The enrollment dates that apply to your situation.
A useful question is, “What would this coverage cost me in a year when I need more care than usual?” That gives you something more practical to compare than the premium alone.
Where's my money at?
You may know roughly what you've saved without having a clear picture of where everything sits. Before you leave work, put your accounts and expected income on one page.
That might include workplace retirement accounts, individual retirement accounts, bank savings, Social Security estimates, and any pension income. Note which amounts are savings balances and which are expected monthly payments. They do different jobs in a retirement plan.
Then ask when each income source can begin and what rules or taxes may apply when you take money out. An account balance alone doesn't tell you how much you can spend. Review tax questions with a qualified tax professional before making withdrawal decisions.
How long is my money going to last?
Start with what it costs to live each month. Include ordinary bills, health care, and expenses that don't show up every month, such as home repairs or replacing a vehicle.
Compare those costs with your expected retirement income. If your regular income won't cover your spending, how much would need to come from savings?
Then test the plan against changes: rising costs, lower investment values, or one person living much longer than the other. No one can promise exactly how long your money will last. Working through those possibilities can help you see whether spending, retirement timing, or withdrawal plans need another look.
What happens if I or my significant other needs long-term care?
Long-term care can mean ongoing help with everyday activities, such as bathing, dressing, or eating. Medicare generally doesn't cover that ongoing help when it's the only care someone needs, so don't assume your Medicare choice settles this question.
Talk through who could help, where care might happen, and how you would pay for it. If you're planning retirement as a couple, consider how paying for one person's care could affect the other person's living expenses.
You don't need every answer before starting a retirement planning conversation. Bring your coverage information, account list, and a rough monthly budget. For people in Lincoln, Nebraska, these four questions are a useful starting point for discussing retirement planning with Bill Jurey.
