Entering retirement—even thinking about retirement—carries a host of emotions ... excitement, stress, relief, anxiety, and joy among them. The team at CCM has experience helping clients navigate all of these emotions and so much more, and we’re honored to provide support in this significant life transition. Before you make the leap, here are four things that you should consider:

Revisit Your Spending

As your retirement date nears, create a budget of all your fixed expenses (mortgage payments and car payments, for example) and variable expenses (such as travel) that you expect to have as you transition to and live in retirement. Outlining a budget can give you peace of mind while also allowing your advisory team to stress-test your retirement projections and build a retirement income strategy based on your personalized spending needs.

Understand Your Healthcare Options

As you think about retirement, it’s important to know where you’ll get your healthcare coverage. If you are retiring before age 65, you’ll have to come up with your own coverage until you are eligible to enroll in Medicare. Some options may include:

  • Staying on your employer plan: Depending on your employer, you may be eligible for continuing coverage as part of your retirement package. If not, you may consider using COBRA coverage to help bridge the gap to Medicare.
  • Joining your spouse’s plan: If your spouse is working and has employer-sponsored coverage, you may be able to be added to his/her coverage.
  • Purchase through the Open Market Exchange. Start here: healthcare.gov

If you are currently enrolled or are turning 65, you’ll need to decide between Traditional Medicare or a Medicare Advantage Plan (Part C). If you choose Traditional Medicare, then you should also consider a Medigap policy, which is supplemental insurance that helps cover costs that aren’t covered by Traditional Medicare. The best time to buy a Medigap policy is during your initial six-month Medigap open enrollment period, where you can purchase a Medigap policy regardless of pre-existing health conditions.

Social Security

While retiring may cause you to consider filing for your Social Security benefits, it is important to understand that there are many factors—such as your health, marital status and history, work history, claiming age, etc.—that play a role in determining your Social Security benefit and the optimal time to file for Social Security. The chart below outlines the potential impact of claiming Social Security at different ages:

Revisit Your Asset Allocation

As you consider retirement, it’s important to ensure your asset allocation aligns with your risk tolerance and spending needs. For example, we may want to consider decreasing your allocation in equities as you near retirement because you have less time to recover from potential market downturns. Alternatively, there may be scenarios where it may make sense to maintain your current allocation or even potentially increase your equity exposure. Ultimately, the key is ensuring your asset allocation fits with your financial plan and your ability to sleep at night during periods of market volatility.

The four areas outlined are a few of many considerations as you begin your transition to retirement. As you have questions that arise, we encourage you to reach out to your CCM advisor to discuss them in more detail.

NOTE: The information provided in this article is intended for clients of Carlson Capital Management. We recommend that individuals consult with a professional adviser familiar with their particular situation for advice concerning specific investment, accounting, tax, and legal matters before taking any action.