A lot of decisions go into a post-retirement plan. You need savings. You need an investment portfolio that can balance income, growth, and risk. You need healthcare coverage. You need a Social Security strategy. And all these pieces need to be able to work together.
Your post-retirement financial plan is not a set-it-and-forget-it scenario. It requires tweaking and refining as your lifestyle goals evolve. Consider reviewing the following major components at least annually. This can help keep your lifestyle in check and your retirement income flowing.
Check Medicare and health expenses.
Healthcare expenses can eat up a lot of your retirement savings. If you have to go to the hospital, Medicare Part A may likely pay for it. You’ll pay regular premiums for other parts of Medicare, including:
- Part B, which is your health insurance.
- Part D, which covers prescription drugs.
- Part F — also called Medigap — which covers deductibles and co-pays. It also pays a percentage of charges not covered by Medicare A and B.
Besides Medicare premiums, you may have to pay for non-covered medical expenses such as hearing care, dental work and eye exams. It’s also important to know that Medicare doesn’t cover long-term care.
You can make changes to your Medicare coverage during the annual open enrollment period from October 15 to December 7. Based on your health and past medical expenses, you may want to add coverage, such as Part D and/or Part F. You may also want to switch from original Medicare to a Medicare Advantage plan.
Review investment performance and withdrawal strategies.
Check to see if your portfolio is aligned with your appetite for risk. It’s also important to keep in mind that once you reach age 70½, you’ll need to take Required Minimum Distributions (RMDs) from your taxable retirement savings accounts.
Because RMDs can impact your taxes, look into how to manage your investments so that taxes can be minimized. For example, selling underperforming assets in any taxable accounts you have before the end of the year may provide some tax advantages.
Time your Social Security benefits.
If your savings are providing enough income, you may want to delay taking Social Security benefits as long as possible. Your benefits increase by about 8% for each year you delay beyond your full retirement age up until age 70.1 But if you need your Social Security income before full retirement age, you’ll have to settle for lower benefits.
Married couples have more flexibility when it comes to when to claim. But figuring out the timing can get complicated. Knowing your situation (including how it might have changed) can help you make these decisions.
Stay on top of household expenses.
As a retiree, you’re living on a fixed income, which makes it even more important to control your spending. A household budget works well for this. Track where your money is going to avoid paying for services you don’t use and to identify expenses you can reduce.
Update beneficiary designations.
Most people don’t need to update their wills or estate planning documents yearly, but it’s a good idea to check the beneficiaries you’ve listed. The designated beneficiaries on titled assets such as IRAs, 401(k)s, life insurance and annuities override any instructions in a will.
When reviewing your retirement financial plan annually, any necessary changes are likely to be minimal. Plus, you can have renewed confidence that the plan you have in place can help you avoid outliving your money.