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Critical Retirement Choices

The idea of retiring isn't new. People who grew too old or too ill stopped working and stayed home long before pensions and Social Security. But as people live longer, the retirement experience takes on a different meaning. Not only can you expect more years of retirement than of adolescence, but they can be a lot more satisfying and rewarding.

The complication is that you're faced with a number of decisions, some of them irrevocable. So rather than waiting to evaluate your alternatives until it's time to choose, it's smart to start thinking about them now.

Set Your Financial Timeline

Age  Things to Consider


  • You can usually begin with­drawing from 401(k)s, 403(b)s, and certain other plans without a 10% penalty if you retire, quit, or are fired.
  • You may be eligible for full pension benefits from some employer plans if you have enough years of service.
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  • You can withdraw money from tax-deferred savings plans (IRAs, deferred annuities) without paying a 10% penalty.
  • You may be eligible for full pension benefits from your employer.
  • You can receive reduced Social Security benefits.
  • You are eligible for full pension benefits from most employers.
  • You qualify for Medicare benefits
  • You're eligible for full Social Security benefits.
  • You should begin to collect your Social Security benefits if you haven't already because your base benefit has reached its maximum.
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  • You must begin withdrawals from your 401(k) and traditional IRAs, but not from Roth IRAs or from employer sponsored retirement plans if you're still working.

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Should I Enroll in Medicare at 65?

It depends. If you're paying for individual coverage, the answer is almost certainly yes, as Medicare will be cheaper. If you’re still eligible for your employer’s plan, you may want to wait. The key is that you must have what the government considers comparable coverage. If you do, you can enroll without penalty in Medicare within eight months after that coverage ends. The answer is almost certainly yes.

If you don't have comparable coverage and delay enrolling after you turn 65, you face a permanent surcharge on your Parts B and D premiums for each year you were eligible and didn't enroll.

If you work for a small company, you may be required to enroll in Medicare Part A—the hospitalization portion—at 65 but be able to keep your employer-plan coverage for doctor visits and prescription drugs. You should be sure to confirm that your insurer will continue to pay claims.

Paying for Health Care

Anticipating the cost of health care after you retire is much more difficult than estimating your living expenses. And you have less flexibility in managing medical bills if you become seriously ill or disabled than you do in managing many of your variable costs.

As you begin retirement planning, you'll want to pay particular attention to the health coverage available through your employer, if that's how you're insured. You need to know what will happen to the coverage if you retire before you’re eligible for Medicare at 65, whether your employer pays the cost of supplemental, or Medigap, coverage, and what arrangements you could make to continue health insurance if your spouse has been covered under your plan and you're eligible for Medicare before he or she is.

You may want to investigate long-term care insurance, especially if there's a group plan for which you're eligible. If you decide it's a good idea for you, purchasing the coverage in your late 50s or early 60s is likely to cost less than waiting longer.

How Do I Make My Wishes Known?

A living will is a document that describes the kind of medical treatment you want—and don't want—if you are terminally ill or in a permanent vegetative state (which means you're unconscious, not able to communicate, and unlikely to get better). In writing your living will, you should be as specific as possible about the kinds of drugs and medical procedures you have in mind and the situations under which they should—or should not be—used.

Though almost all states accept living wills, the laws of each state are a little different, so you want to be sure that the living will you sign meets local requirements.

You should also be sure your family and your doctor know that you've signed a living will and where they can find a copy. You don't need a lawyer to draw up the document, although if you're in the process of preparing a regular will, you can sign both at once, probably for little or no additional charge.

A living will makes your health care wishes known, but it does not always guarantee they will be followed. Someone will still have to authorize treatment, or make a decision not to continue it. You can appoint a health care agent or surrogate in a signed and witnessed document known as a health care proxy, or you can grant a durable power of attorney for healthcare to someone who will make the decisions you would have wanted.

You should be sure to ask permission of the person you name and describe your feelings about your care in detail. Without understanding what you want, it would be very difficult for your surrogate to see that your wishes are carried out. Because there are still unresolved legal questions about the extent of a surrogate's authority, it probably makes sense to get legal advice in preparing these documents.

Gradual Retirement

An alternative to moving abruptly from working one day to retirement the next may be working gradually less over a period of time.

Gradual, or phased, retirement can take different forms. You might reduce the number of days you work each week—from five to four to three—or the number of hours a day. Or you might find a new job with a flexible schedule.

There may be some roadblocks to staying where you are. Qualified employer plans have strict rules limiting your ability to collect retirement income while you're still employed at the same company. Your reduced schedule would have to provide enough income for you to maintain your standard of living if you didn't want to begin tapping your retirement savings.

If retiring slowly sounds appealing, it's probably smart to start investigating your alternatives sooner rather than later. If your employer values your work, he or she may consider rehiring you as an independent contractor or consultant or find some other way to keep you on board. But you'll probably have to take the initiative.


Start planning for your future.

Questions about your retirement? Our advisors can help! Contact us at 877-483-6811 or online. 

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