Critical Retirement Choices

Welcome to WesBanco Wellness: Ready, Set, Retire Series. In an effort to help you set up a solid financial footing for the future, we will be presenting articles that can help to guide you on your retirement journey.

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 retirement 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 early.

• 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 (Traditional IRAs, Roth IRAs, deferred annuities) without paying a 10% penalty.

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• You may be eligible for full pension benefits from your employer.
• You can receive reduced Social Security benefits.

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• You are eligible for full pension benefits from most employers.
• You qualify for Medicare benefits.

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• You’re eligible for full Social Security benefits if you were born between 1943 and 1954.

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• 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.

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.

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.

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, 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.

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Content is for informational purposes only and is not intended to provide legal or financial advice. The views and opinions expressed do not necessarily represent the views and opinions of WesBanco.

While we hope you find this content useful, it is only intended to serve as a starting point. Your next step is to speak with a qualified, licensed professional who can provide advice tailored to your individual circumstances. Nothing in this article, nor in any associated resources, should be construed as financial or legal advice. Furthermore, while we have made good faith efforts to ensure that the information presented was correct as of the date the content was prepared, we are unable to guarantee that it remains accurate today.

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