Tips on How To Retire in 2013 #SHGenworth

Disclosure: Information for this post is sourced from Genworth Financial but feature my own thoughts and opinions.

Even though I am still in my (very) early 30’s, I have been thinking about retirement lately.  Seeing both my parents and my in-laws with their finances reminds me how expensive getting older can be!  From grandchildren to illnesses to desires to travel, I want to have a good nestegg so when I’m older I won’t have to struggle or not be able to do certain things.  I have never been one to plan for emergencies nor do we even have a Savings account for ourself, but that is going to have to change.

Last month actually my father-in-law became of age to retire from his carpenter’s union job.  He is still so young, a lot younger (50’s) than previous generations would have even considered retiring.  With many of the baby boomers turning 67 this year, a lot more people may be considering retiring too.

According to an article in the DailyFinance entitled “7 Tips for People Planning to Retire in 2013” here are some things to think about:

• Vested – While you have been contributing to your retirement, many companies don’t consider you “vested” until you’ve been with the company for “X” amount of years.  What that means is that all that extra money contributed to your retirement from your employer may disappear if you retire too early.  In some cases it may even be well worth it to stay at your job even longer for a bigger retirement payout!

• Think about when you are going to claim Social Security – Claiming Social Security before age 66 will get a reduced payout while those who wait until they are 70 can get a lot more.  If you can afford to it may make sense to wait until your 70.

• Sign up for Medicare – As soon as your three months away from age 65, sign up for Medicare.  If you wait until four months or longer after your birthday, your monthly premiums will increase by 10 percent for each 12-month window you were eligible for, but did not enroll in, Medicare Part B.  If you retire before you are 65 then you are responsible for your own health insurance, which is definitely something you will need to budget for then.

• Control your investments – Since most can’t afford to loose money due to risk taking in the market, many will become conservative as they get older.

• Plan your spending – After you retire you will need to plan how you will be paying your monthly bills and so forth.  Keep in mind income tax too that will be due on traditional 401(k) and IRA withdrawls.

• Don’t forget to take your minimum distributions – After your turn age 70 1/2, you are required to take annual withdrawals from your traditional 401(k) and IRA accounts.  The penalty for failing to do so is 50% penalty on the amount that should have been withdrawn.

• Consider cutting down your hours instead of retiring – Many find that retirement is not all its cracked up to be and you don’t want to burn any bridges by quitting.

I honestly had no clue about all the penalty, exact age restrictions and factors to consider.  If you are like me and want to start thinking about it but not sure your ready or even if you just want to get an idea about the future, check out this great resource from Genworth entitled “Are you Ready?”