Retirement Planning Tips

Less than 5 Years from Retirement

Retirement Planning Seminars

  • Zooming Into Retirement: Register for these sessions held online or scheduled throughout the state (when available). Check for the retirement plan and schedule that works for you.
  • Defined Benefit Retirement Process: This pre-recorded video is for MERS Defined Benefit participants within five years of retirement.

Pay Off Debt Before Retirement

It’s a simple fact – every dollar you owe reduces your income in retirement. It’s important to balance saving for retirement and paying down debt, so when you are ready to retire, you can do so with as little financial obligations as possible.

Ideally, you will have your mortgage paid off by the time you are ready to leave the workforce. If not, you may want to consider working until it is paid off.
But what about those other obligations such as credit cards or auto or recreation vehicle loans? Should you delay retirement until those are paid off? Maybe, but with some budgeting and planning, you can likely take care of those debts without putting a major wrench in your retirement plans.

The first thing you will want to do, if you haven’t done already, is create a household budget. This will help you get a handle on what your monthly expenses and income are, and you can determine where some cuts can be made, if needed, to help pay off those bills and loans.
Keep Saving!

Retirement may be just around the corner, but that doesn’t mean you should relax on how much you’re saving.  Your last few working years may be your highest earning years, so put that money to good use by maximizing out your annual contributions if you are able. And after doing so, consider making additional “catch-up” contributions to meet your retirement savings goal. Catch-up contributions are additional amounts those age 50 and older are allowed to contribute to many retirement plan types each year.

For more information on catch-up contributions and annual contribution limits, check out this CentsAbility blog article.

Know Important Dates

While your path to retirement is unique, there are certain ages that stand out for everyone. Keeping these key ages in mind will help ensure that you are able to make the most of your planning years and avoid penalties for not taking action on time.
Check out this Retirement by the Ages handout to learn more about important dates and actions you need to take.

Review Retiree Health Care Coverage Options

Now is the time to review your coverage options for retiree health care. If you’ll have employer-sponsored coverage, talk to your employer about the plan and determine what will be covered. If you need to find your own coverage, MERS can help. Our partnership with Mercer Marketplace 365+ provides participants with access to pre-65 and 65+ retirement plan options through a private health care exchange. Mercer benefits counselors are available to speak with you and provide more information, coverage options and costs.

View more information on retiree health care options and the Mercer Marketplace 365+ retiree health care exchange.

Educate Yourself on Social Security Benefit Options

Social Security is a complex program with nuanced payout options based on your specific life circumstances. This is why it’s important to educate yourself on Social Security benefits before you enroll.

It is also important to recognize that while Social Security can provide some financial security, you shouldn’t rely only on your Social Security checks to fund your retirement. Social Security benefits represent about 39% of elderly people’s income, according to the Social Security Administration. Trying to retire only on Social Security has a lot of hidden costs and risks.

MERS offers several Social Security webinars throughout the year to help answer your questions. View upcoming events, and you can find more information and resources on this Social Security handout.

Consider Consolidating Retirement Accounts

If you worked for more than one employer during your career, you may have multiple employer-based retirement accounts. When you add in any personal investments or individual retirement accounts (IRAs) you have, monitoring your investments can be overwhelming. Before retiring, consider consolidating your accounts. Here are five reasons why this can be a smart decision:

  1. You’ll spend less on account fees.
  2. It’s easier to manage your investments.
  3. Required Minimum Distributions (RMDs) will be easier to track.
  4. It’ll save you time.
  5. Your loved ones will thank you.

This article provides a deeper dive into each of the reasons mentioned above. Interested in learning how you can roll funds into a MERS plan? View our rollover resource page.

Create or Update your Estate Plan

It’s difficult to think about, but the day will come when you pass and your loved ones will be responsible for dealing with and dividing up your possessions. One way you can make this sad time a little easier is to have an estate plan on file, and keep it updated.

An ideal estate plan describes your wishes as clearly and completely as possible. This helps others know your requests in the event you’re incapacitated or you pass away. You may even need several types of documents to cover all your bases such as:

  • will to clearly define your final wishes.
  • An advance care directive (also known as a living will) to specify the course of your medical treatment at times when you can’t make choices for yourself.
  • health care proxy which designates someone to make choices about your medical care when you are unable to do so.
  • Statements of intent which allow you to lay out your philosophy and preferences for the guardians and trustees who will be asked to carry out your wishes.

For more information on creating an estate plan, check out this CentsAbility article and this Quick Bite Webinar.

Keep your Beneficiaries Current

Chances are, you designated beneficiaries for your retirement accounts, life insurance policies and similar assets some time ago. Since then, your personal and family situations may have changed. To ensure that your assets will be distributed as you intend, you should periodically review your beneficiary designations.
View information on adding or updating beneficiaries to your MERS plan(s).