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sources need to meet the three basic income needs—assured lifetime income, cost of living protection, and flexibility.

The 457 plans make it easy for retirees to manage their retirement assets by offering flexible investment and payout options. Additionally, 457 tax rules allow retirees that have left the sponsoring employer’s service and have reached the plan’s normal retirement age to receive withdrawals. This is especially important for retirees that have not yet reached the age of 591é2. A tax smart distribution plan will take into account tax deferred retirement savings as well as taxable savings and investments to maximize their tax deferred growth.

A financial planner can be invaluable in sorting through these issues. Also, general information is readily available from organizations such as the AARP both on the Internet and locally.

CONSIDER ALL INCOME SOURCES

Most people will have retirement income from a variety of sources in addition to Social Security Benefits, like home equity and the cash value of life insurance policies. Remember, married retirees should include their spouse’s retirement benefits into the equation as well.

UPDATE ESTATE PLANNING

If they haven’t previously attended to these details, now is the time for retirees to provide for the distribution of assets after their death. A good first step is to make sure his or her will is in order and up to date. Review beneficiary designations for pension plans and other assets. Careful estate planning requires specific expertise. Consult with an attorney to prepare a living will and durable power of attorney.

CONSIDER HEALTH CARE
AND INSURANCE NEEDS

The cost of medical care is a growing concern for most people today—especially retirees. Adequate medical coverage must be maintained before and after Medicare eligibility kicks in. Employees first stop should be at their employer’s benefits office to find out what, if any, health coverage will be provided for themselves and their spouse after retirement. Next, employees need to investigate all possible options for continued or additional coverage. For example, if the spouse is still

working, it may be possible to pick up coverage through his or her employer.

It is crucial that employees find
out the exact enrollment period
and options available for Medigap (supplemental medical insurance), failure to act can be costly. Brief open enrollment periods are available as employees turn 65. As discussed previously, employees need to consider how they will cover the cost
of long term care, either through insurance or the allocation of other assets.

Depending on the employee’s situation (e.g., dependent children or distribution options) it may be necessary to carry life insurance protection into retirement. Employees need to investigate term life and whole life options and determine which option will best
fit into their retirement budget and which will best provide for their beneficiaries.

GET PROFESSIONAL ADVICE

Preretirees will benefit from the advice of investment and tax professionals as well as attorneys as they finalize their retirement plans. These professionals can provide invaluable assistance a variety of issues including:

1.†Managing assets to last throughout retirement;

2.†Choosing pension options;

3.†Providing an insurance review;

4.†Providing investment guidance;

5.†Updating estate plans; and

6.†Exploring lifetime giving opportunities.

By taking the time to make sound decisions about retirement income and distributions now, employees nearing retirement will help ensure that their needs will be met throughout their retirement years. Careful preretirement planning can make the goal of a financially secure retirement a reality.

For more information:

Robert Morales, CFP

Managing Director

ICMA Retirement Services

ICMA-RC Services, LLC

777 North Capitol St., NE

Washington, DC 20002

(202) 962-6936

morales@icmarc.org