Preparing for retirement

Things to consider:

Retirement income needs:

• Prepare a budget that includes ongoing retirement expenses, as well as one-time, lump-sum purchases.
• Distinguish essential needs from optional wants.
• Use budgeting software, online tools or a simple spreadsheet.

Log in to your account and use the Retirement Income Calculator! You'll find out if you're on your way to having the income you'll need in retirement.

Pension strategies

Do you or your spouse have a pension? Find out:

• How much you're projected to receive based on different retirement dates.
• What survivor benefit options are available for your spouse or other beneficiaries.
• Your payment options.

Estate planning and recordkeeping

Consider whether you wish to leave an inheritance for any family members or charities. If so, estate planning becomes especially important. A qualified estate planning attorney can help you:

• Name beneficiaries on your retirement accounts, annuity contracts and life insurance policies.
• Create a will to direct the distribution of other assets and determine who will care for your minor children or other dependents.
• Establish a living will and a medical power of attorney.
• Establish a financial/durable power of attorney to direct financial decisions if you become incapacitated.
• Decide if you'd benefit from a trust.

Things to consider:

Healthcare

Understand the options that may be available to you both before and after you become eligible for Medicare. Consider:

• Coverage
• Costs, including premiums, deductibles and coinsurance
• Supplemental coverage

The Health Care Savings Calculator at aarp.org can give you insight into potential medical costs in retirement.

Long-term care insurance

Begin thinking about how you'll cover the potential cost of long-term care—including help with daily life activities—which is generally not covered by Medicare.
Visit longtermcare.gov for more information.

Taxes

Know how your investments are taxed. Work with a qualified financial or tax professional to determine how to manage those taxes, along with state income tax, property tax and sales tax. Don't forget to consider taxes you'll pay on income, like pension and Social Security benefits.
To learn more about federal taxes, visit irs.gov. For state taxes, visit retirementliving.com/taxes-by-state.

Things to do:

• Choose your retirement date and complete necessary paperwork.
• Apply for your defined benefit pension from a former employer, if applicable.
• Apply for Social Security and Medicare.

Keep in mind that trips or calls to the Social Security and Medicare agencies may take some time, and processing times may also involve long periods.