Ready Set Retire

The most critical phase of retirement may just be the year before you leave your job. Use the time to get your plan squared away.

- Jane Bennett Clark

You wouldn’t dream of running a marathon without undergoing months of training. Or heading into the wilderness without making sure you have adequate provisions. Or betting your life savings on a business venture you haven’t thoroughly researched.

But when it comes to entering retirement—when a failure to plan can have devastating consequences— a surprising number of people are unprepared. More than half of workers older than 55 haven’t developed a plan for paying themselves in retirement, according to a recent study by Ameriprise, and almost two-thirds haven’t identified which investments they’ll tap first. Many wait until they’ve set their retirement date to put together any kind of plan at all.

Planning late is better than never planning, but your chances of a secure retirement will improve if you start making decisions and checking items off your to-do list at least a year out. Among the issues you’ll face: how and when to sign up for Medicare and Social Security, how much income you’ll need for essential expenses, and how to take advantage of employer benefits before walking out the door.

SIGN UP FOR MEDICARE

One item on your to-do list you can’t ignore is signing up for Medicare. You’re eligible at age 65, and you can sign up without penalty anytime from three months before until three months after the month of your 65th birthday. (If you claimed Social Security benefits early, you’ll be automatically enrolled at age 65.) Medicare Part A covers hospitalization and is premium-free, so there’s generally no reason not to sign up as soon as you’re eligible. One exception: You can’t contribute to a health savings account if you enroll in Medicare. If you have an HSA and want to keep fueling it, don’t sign up for Medicare until you retire. (To enroll, go to www.ssa.gov.)