What an eye-opener. I had no idea how many decisions there would be prior to retirement! I know that not everyone has the exact same situation but there are so many things to think about. As I’ve been learning, listening, and reading, I feel like I’m peeling layers from an onion.
One question leads to another, other questions lead to a decision point and all decisions have a bearing on other decisions. On the one hand, I’m finding this exhausting and confusing, and on the other hand, I’m realizing that I’m grateful to have the time to figure this out.
There are many decisions in life that are temporary or short term. You can change your mind when the circumstances change in the future. But a number of retirement decisions not only have a consequence, but several of them also can’t be changed later. Mostly, all of those types of decisions would be easier if you knew when you or your spouse were going to pass away. But, unfortunately, there are only so many times that you can go on those calculators that ask, “How long will I live?” The answer is always the same. Pretty soon you realize that since no one knows the time or date of your death, you will never have all the information you’ll need to decide what choices to make.
Many of these decisions are related to finances, but there is a relationship to your retirement dreams. How much your dreams will cost, where you will live, and what you plan on doing every day all have a bearing on your decisions.
I think working on your purpose and goals is a great place to start. Knowing what you are good at, knowing what you love, and knowing how you can serve others – if those things can intersect and it doesn’t cost too much – that would be magic!
But after you know your purpose, there are quite a few important decisions to consider. While I don’t have all the answers or even all of the information, here is a list of some things that we are talking about. Having a trusted financial planner has helped us, but in the end, the decisions we make are completely up to us.
Social Security – draw early, at full retirement age, or wait until 70?
Pensions – Cost of Living Allowance or not? Survivorship at 100%, 66.66%, or 50% or none?
Take withdrawals from retirement savings or cut expenses?
401(k) or 457(b) – Keep where they are or rollover to an IRA for more investment options and fewer fees?
Retirement dates – the day of the month, or a specific month, what is better?
Life Insurance as a Pension Maximizer – Good idea or not so good?
Medical Insurance – COBRA, State plans, private insurance if you are retiring before medicare eligible?
Housing – Live in the same house or in the same community or change it up and move?
Leave accrual cashouts – take the cash or put into Deferred Compensation to avoid taxes?
To celebrate retirement – Have a big party, take a trip, or save the money?
There are books and articles and advisors. There is research you can do and there are spreadsheets and charts to read and analyze. Some things take more time than I realized. We know it is up to us to make those calls and get the answers we need.
For example, before I can apply to retire from the State of Washington retirement system I have to get an estimate. The first time I requested an estimate it took 4 weeks and they made a mistake. My second time around it will take 5 – 6 weeks. I’m still waiting. Only after the estimate has been provided and I agree with it can I actually take the steps to apply. There are documents to submit like marriage certificates, birth certificates, and forms to sign that all take time to find and submit. I’m so glad I’m doing this now.
We are weighing and deciding the cost versus the benefits of the various survivorship options for my pension. This is a decision that I get one chance to decide. Depending on my choice there could be heavy discounts every month for the rest of my life. But if I want to consider a term life insurance as an option before I can even understand the cost of different coverages, I’ll need to have a third party medical evaluation and the underwriting can take 45 – 60 days. Also, I learned that if I’m insured before my next birthday, they’ll use the earlier date to set my rates. Who knows all of this stuff?
My conclusions so far:
There are “no bad ideas” when you are brainstorming
There are more questions than answers early in this process
There are lots of people out there that their entire job is to help you
All of this takes time – the phone calls, meetings, and appointments
You will never have all the information you need
You don’t know how long you will live and so there are no guarantees
Once you pick a retirement date the clock is ticking
The best decisions are made when you have more information
You need some time to evaluate what is best for you and your partner
We are getting closer every day, but we are not there yet!
Decisions, Decisions, Decisions!