5 Issues to Face Before You Retire

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By Tom Sightings

There are a few issues you need to address if you're planning to retire. If you're already retired, and you haven't resolved them, you should get on them right away. If you don't take stock now, you risk letting your satisfying retirement slip away later on. A plan is essential for these aspects of retirement.

1. Do a rough draft of your retirement budget. You may not know exactly what your financial position will be in retirement, but you can make an educated guess. You may want to travel or your health care expenses may go up. Housing is likely to be your largest expense and an average of 40 percent of your budget, according to the Employee Benefit Research Institute. Maybe by the time you retire your mortgage will be paid off or you plan to move. Either way, figure out your housing and other major expenses. Then make sure your income from Social Security, IRA withdrawals and any other income sources such as pensions, alimony, rental income and part-time work will cover your costs. Try to match them up, at least within a 10 percent margin of error. If there's a big gap, it's better to know it now when you can still do something about it. And remember to figure in taxes. Withdrawals from a traditional IRA are taxable. Withdrawals from a Roth IRA are not. Your Social Security payments may be taxed, depending on your income. Do your research, so you're not surprised by less take home pay than you figured.

2. Determine your post-retirement investment plan. While you were working, your employer may have handled your investments, and they were probably focused on growth. Now is the time to shift to a more conservative asset allocation, perhaps by putting more money in bonds or selling your high-flying social network stocks and investing in lower growth but more stable telephone, utility or industrial companies. The idea is to keep a balance of investments that are not too risky or conservative and will offer the best odds of keeping the money flowing in your later years.

3. Start making plans for your new living arrangement. You need to discuss and plan for where you are going to live in retirement, which often involves downsizing or relocating. You can save a lot of money by moving to a smaller house in a lower cost neighborhood. But remember, it costs a lot of money to move, and finances are not the only consideration. Many people live where they live because of a job. But you don't have a job anymore, so you can live anywhere you want, even overseas. Do some research in advance, and try out any new location by spending time there before you move. You don't want to relocate only to find out you hate the place and want to move again. While many retirees have paid off their mortgage, some haven't. If you want to refinance, do it before you leave work. It will be easier to get a loan and take advantage of low mortgage rates while you are working.

4. Give yourself a health checkup. If you're retiring before age 65, figure out how you're going to get health insurance. Check and see if you can carry any of your company benefits into retirement. As you approach 65, do your Medicare homework. Even if you're still working, you may want to sign up, since there can be penalties for delaying. Also, take a realistic assessment of your health. Now that you're retired, maybe you can improve your lifestyle. A lot of people find that retirement comes with less stress and more time to take care of yourself. Perhaps now is the time to invest in a gym membership or some new clothes or equipment for biking, hiking, swimming or dancing.

5. Make a plan. Once your finances are in order and your future is secured, it's time to scope out how you're going to fill your retirement calendar. Sure, you're retired and want to relax, but you don't want to get bored and lonely. Now is your chance to try a new hobby, do some volunteer work, make new friends, join a club, learn a new sport or practice a new language. Your job now is to build a new life based on your own interests, rather than those of your old employer. It's time to step forward into a new lifestyle where you stay active and engaged with other people, and pursue a vision that brings you a greater level of personal fulfillment.

Tom Sightings blogs at Sightings at 60.

The 10 Best Places to Retire on Social Security Alone
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5 Issues to Face Before You Retire

Senior citizen renters pay a median of $686 monthly to live in Albuquerque. Homeowners age 65 and older pay a median of $1,078 a month if they have a mortgage and just $368 monthly if they have paid off the mortgage. There are six senior centers where people age 50 and older can become members for just $13 a year.

The low housing costs in Texas are drawing people to the state. A home in Austin costs retirees a median of $1,395 monthly with a mortgage and $545 if they own their home debt-free. The median rent for retirees age 65 and older is $887 monthly. Texas doesn't have a state income tax, but it's important to carefully consider the property tax you might face on any home purchase.

If you can tolerate the cold and snowy winters, you'll be rewarded with a very low cost of living. Senior citizens age 65 and older pay just $466 monthly in housing costs if they have paid off their mortgages, $1,009 monthly if they are still paying off their home and $611 in monthly rent. The City of Buffalo also provides a senior discount card that entitles retirees to a percentage off their purchases when they shop at local businesses.

South Carolina residents age 60 and older who are no longer working are eligible for free tuition at the University of South Carolina. Seniors can also get discount tickets to the Riverbanks Zoo and Columbia Museum of Art. Housing remains affordable, costing retirees $1,074 monthly with a mortgage, $367 with a paid-off house or $801 in monthly rent.

This small city is known for its outsized art scene, which includes the Frederik Meijer Gardens & Sculpture Park, Grand Rapids Art Museum, Urban Institute of Contemporary Arts and the art competition ArtPrize. Retirees age 65 and older pay just $684 monthly in rent. Older homeowners pay $1,080 monthly with a mortgage and $427 a month if their house is paid off.

Jacksonville offers balmy winters similar to other parts of Florida, but at much more affordable prices. Retirees age 65 and older pay a median rent of just $861 a month. Older homeowners pay a median of $1,247 a month if they have a mortgage, which drops significantly to $405 once they pay off the house. An added bonus: There's no state income tax in Florida.

Pittsburgh has several professional sports teams, noteworthy museums, major colleges and the UPMC-University of Pittsburgh Medical Center, which is ranked 13th in the country in geriatrics. But housing prices remain affordable, costing senior citizens a median of $1,023 monthly with a mortgage, $434 when they have paid off their house or $614 a month in rent. Plus, residents age 65 or over ride free on the bus, T or Monongahela Incline.

The Spokane River flows through downtown Spokane and can be enjoyed at Riverfront Park, one of the city's numerous recreation areas for hiking and biking. Washington state doesn't have an individual income tax, and housing in retirement is affordable, costing just $419 monthly with a paid-off house and $1,139 monthly with a mortgage. The median rent for people age 65 and older is $733 monthly.

Home costs for seniors are $1,115 monthly with a mortgage and $434 a month with a paid-off house, while renters pay a median of $664 monthly in rent. There are also affordable local services to transport retirees to doctor appointments and the grocery store and help with minor home repairs and chores. The Barnes-Jewish Hospital/Washington University is nationally ranked in geriatrics.

Retirees can take in the enormous cactuses at Saguaro National Park, where U.S. citizens age 62 or older can get a lifetime pass to this and other national parks for just $10. Yet this sunny city remains affordable. Monthly rent for people 65 and older is a median of $771. Older homeowners pay $1,095 monthly with a mortgage, but that drops significantly to $366 for people who have paid off their homes. Plus, the state of Arizona doesn't tax Social Security income.

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