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Retirement is one of the biggest milestones you will encounter. It can be a scary transition knowing the rest of your expenditures are dependent on the savings you have parked in retirement accounts and social security benefits (of applicable and available when you retire). Here are some important things to consider before you take the leap:
  1. Budgeting retirement expenses - Sit down with your spouse/family to plan your monthly and annual expenses. Certain expenses decrease or go away completely when you are retired (commuting, dry cleaning, clothes, etc), while at the same time new expenses come up (health care, increased travel, leisure, gifting). So, get a clear picture of your expenses before you run the numbers.
  2. Retirement income planning - Once you've figured your budget out then you need to validate that budget against different sources of retirement income. These sources may include pension from a former employer, social security and income from retirement and non retirement accounts. You need to balance your expense budget against the retirement distribution rate that would be sustainable for you.
  3. Health Insurance - Health insurancebecomes especially important if you retire before you are eligible for Medicare. COBRA rules allow for extending your health insurance from your former employer for 18 months. Check with your company to see if it offers retirees additional healthcare benefits. Note: Medicare may not be available to you until you turn 65.
  4. Life Insurance - If you have a life insurance policy, you may want to review it in the light of your changed lifestyle.