Not everyone retires on time, on schedule, the second they turn 65. Some of us find ourselves in semi-retirement. Whether it's by choice or circumstance, what you’ll need at this stage is a solid financial roadmap, so you can spend less time worrying and more time racking up a record number of three- and four-day weekends at the cabin this summer.
Health care costs
Unfortunately, managing your health care expenses in the pre-Medicare years (ages 55-64) can be a bear. Chances are, this may be the one thing that stands between you and full retirement.
If trading in the long hours of your high-pressure job for something more low-key sounds like a second-best plan you can tackle, then you have a great chance to make the health insurance thing work until Medicare kicks in.
For starters, see if you can get your employer to agree to a scaled-back schedule. Under the Affordable Care Act, employees who work 30 hours a week for 120 days out of the year are eligible for employer insurance benefits.
Another option is to consider a new role that pays less but fits your passion, be it pets, nonprofits, books. The right opportunity could offer that laid-back lifestyle you seek while also covering your needs.
Hold off on Social Security payouts
If you’ve reached the age of 62, you may be tempted to activate those Social Security benefits before you even think about tapping those retirement funds. It seems counterintuitive, but doing the reverse might actually preserve your nest egg even longer.
Why? By waiting until your 70s you may save big time on taxes. By then, you’ll be able to make smaller withdrawals from your retirement funds because you’ll be eligible for a larger federal benefit. On top of that, you’ll stand a better chance of getting your Social Security benefits tax free.
Reallocate your retirement funds
It’s not uncommon for investors to hang on to their portfolio of stocks for decades. Once you reach your 50s, you might be on the fence. Should you rebalance your portfolio to straight bonds to protect your nest egg? On the other hand, you may worry about the cost of lost opportunity. Because, heck, what if that stock market has a good run?
Schedule a sit-down with your financial professional to get your retirement portfolio in balance, so you can protect your income while maximizing your opportunity.
Budget carefully
Reducing your work schedule is always worth a fist pump, especially if it adds more long weekends to your calendar. With this fluctuation in cash flow comes more careful management.
This is a time to be extra mindful of tracking your expenses. Start by reviewing these weekly, and deciding what’s necessary and what’s waste.
Doing these things will help you rest easy knowing you can live your semi-retired life on your terms!
At Minnwest Bank we have the convenient mobile banking tools and hassle-free checking to help manage your spending and pay the bills. Plus, our personal bankers are always just a phone call away.