Retirement is just around the corner, and you’re starting to look seriously at when you should pull the trigger and leave the working world. As you start thinking about this process, you should look very carefully at the date on which you decide to retire—not just the year, but the exact date.
Retiring too soon can cost you some important benefits and saving opportunities. The exact date you choose can possibly impact your employer 401(k) match, compensation for unused vacation days and medical benefits. With a little planning, you can ensure that you are maximizing your saving potential and setting yourself up for the best retirement possible.
Below are three things you should think about when trying to decide your retirement date:
Employer 401(k) Match Date
Typically, employers will match your 401(k) contributions throughout the year. However, some companies make a single contribution in December. This can be important, as profit-sharing and bonuses are generally awarded at the end of the year. If you retire midyear, you may not get your year-end match. Picking the right retirement day can help you get as much savings as possible for your retirement.
Be sure to check with your human resources department to get an estimate of your potential end-of-year match contributions. If they’re sizable, you may want to schedule your retirement after those contributions have been made.
At most companies and organizations, your vacation days accumulate throughout the course of the year. And for most companies, you are compensated for any vacation days you did not use during that year.
However, some employers may award the full year of vacation days as soon as the calendar turns to January. If you’re looking to retire at the first of the year, you may want to talk to your benefits manager to make sure you will be compensated for any unused vacation days. For instance, if you will accrue a new year’s worth of vacation in January, perhaps consider pushing back your retirement a month or two. That way you can receive compensation for the new batch of unused days.
Do you have any chronic health issues or perhaps necessary procedures that you’ve been putting off? It might be a good idea to schedule doctor visits while you’re still on your employer’s health care plan. You may want to consider going through with complicated or costly treatment today.
Health care can be expensive in retirement, and Medicare usually covers only a portion of expenses. There is no Medicare cap on out-of-pocket costs. You may want to take advantage of your employer’s healthcare coverage while you have it.
Ready to make the final planning decisions before you retire? Let’s talk about it. Contact us at Foote Financial Group for more information. We welcome the chance to help you analyze any remaining questions and develop a strategy. Let’s start the conversation today.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
16238 - 2016/11/15