Top5 Last-Minute Retirement Tips for Baby Boomers


By Aleksandra Todorova,

ARE YOU READY for retirement? If you're a baby boomer, you're probably planning to leave the nine-to-five grind soon, making this a prime time to take the necessary steps for a smooth transition.

From savings to insurance policies, here's what you need to know -- both financially and mentally -- to prepare for the next phase of your life.

1. Assess Your Needs -- and Wants

Everyone has their idea of the perfect retirement. But how much will it all cost? It's a question most baby boomers have a hard time answering, says Barbara Steinmetz, a certified financial planner in San Mateo, Calif. "That's part of what stymies a lot of people's retirement savings," she says. "They don't figure out exactly how much they need, so there's no motivation driving them to save more."

Determining exactly how much you'll need isn't an easy feat. But as you get closer to retirement, you should be able to get a better grip on your future spending. Start by dividing your expenses into required (housing, health care, utility bills) and desired (travel, gifts, expensive dinners: things you'll forgo in a financial crunch) categories. Your required costs should easily be covered by your monthly guaranteed income -- Social Security, a pension, an annuity. That way, you won't risk running out of money. Desired expenses should be paid for with withdrawals from your retirement savings. When your portfolio isn't performing so well, skipping the nights at the opera should help do some damage control.

To help you arrive at your retirement "number," either seek the help of a financial planner, or crunch your numbers in's Retirement Worksheet. (Click here for detailed instructions.) Use this link to calculate the amount you can withdraw from your portfolio in order for your savings to last a desired number of years.

2. Take a Look At Your Portfolio Mix

It's a natural feeling: The closer you get to retirement, the more those stock market swings give you the jitters. Don't lose your nerve -- or worse, shift all of your savings into conservative investments such as bonds or cash, Steinmetz warns. "People are living a lot longer these days, so as you head into retirement, your money has to continue to work," she says.

As her clients prepare for retirement, Steinmetz usually shifts two years' worth of living expenses into a safe, liquid account, such as a money-market fund or interest-earning savings account. That way, should a bear market hit during your golden years, you can simply withdraw money from your cash supply rather than your stock portfolio. Click here for more advice on tapping your investment portfolio in retirement.

Also, use the Asset Allocator to find the mix that's right for you. And use the Asset Allocator for Retirees to determine your ideal asset allocation in retirement.

3. Check Up On Your Health Benefits

If you're planning to retire before Medicare kicks in at age 65, make sure you have adequate health coverage. Chances are, if you're currently employed, you have health insurance through your company. But not all employers extend these benefits to retirees and of those that do, most are hiking retirees' premiums and co-pays. In fact, last year 74 percent of the companies surveyed by Hewitt Associates and the Kaiser Family Foundation increased premiums for retirees under age 65. Worse, 11 percent said they had eliminated health benefits for new retirees overall. Workers who retired that year paid an average $2,724 in premiums, while their employer contributed $3,900.

Without the proper health coverage, an emergency could easily wipe out a chunk of your retirement savings. If your employer doesn't provide retiree health benefits, you can take advantage of the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, which, among other things, requires companies with 20 workers or more to extend employee health benefits to retirees for 18 months after retirement. (Keep in mind, your costs will be high, as you'll be expected to pay your employer's original share of health costs on top of your own.) During this time, be sure to do some comparison pricing on private health insurance coverage. Read our story here for advice on buying private health insurance.

4. Review Your Insurance Policies

Every penny counts when you live on a fixed income. So it pays to review your insurance policies and make sure you're not paying for more than you should.

"Most people need life insurance when they're young, married and have children they're trying to put through college," says Andy Smith, a CFP in Cornelius, N.C. "Once you go into retirement age, a lot of your life events have already happened."

Of course, many folks find they like having the peace of mind that life insurance offers. But if your kids are out of college and you're comfortable that your retirement savings is enough to support your spouse should anything happen to you, then maybe paying a huge premium on a $2 million policy isn't worth it, Smith says. Crunch your numbers in the calculator to find out how much, if any, life insurance you need.

Instead, you might consider another type of insurance: long-term-care (LTC) insurance. LTC insurance will pay for the cost of in-home care or an assisted-living facility should you become ill or incapacitated. Premiums aren't cheap, but they could be well worth it when you consider that the average cost of a nursing home these days is $75,190 a year, according to the Metlife Mature Market Institute. The good news: The younger you are when you purchase LTC insurance, the lower your premiums will be, Smith says. Of course, not everyone should buy it. If you've got plenty of savings to cover the costs of a retirement home, you don't need that added expense. Click here to find out if you need LTC insurance. If you decide to shop around, use this tool to evaluate individual policies.

5. Make a Stimulating Plan

Getting ready to retire shouldn't be all work and no play. One of the most pleasant tasks on your list of things to do is to figure out how you'll spend your days when you leave your job. "Our clients are always excited about leaving the day-to-day grind, but they often don't think what it would be like to not have a structured [schedule] for an indefinite period of time," says Heather Locus, a CFP in Itasca, Ill. After all, there's only so much you can golf or fix around the house, and if you're lucky enough to have the longevity gene, you're looking at 30, 40 or even more years in retirement. Locus has seen plenty of clients go back to work after eight months or a year, simply because they're bored.

One path that an increasing number of baby boomers and early retirees are choosing is to take on a new career. Many are going back to school to retrain for jobs in fields like teaching, social work or nursing. Such vocations give meaning to your days, and as an added bonus, help improve your bottom line. Click <a data-cke-saved-href="" href="" target="_blank" "="">here for more on transitioning into encore careers.

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