12-15-2016 Columns

Investing in Your Future


Here’s your retirement “To Do” list

 At this time of year, your life is probably more hectic than usual – so you may have assembled an impressive “to do” list. This can be a helpful tool for organizing your activities in the near future – but have you ever thought of developing a “to do” list for long-term goals, such as a comfortable retirement? If not, you may want to think about it – and here are a few list-worthy items to consider:

Examine – and re-examine – your planned retirement age. You may have long counted on retiring at a certain age, but are you sure that this goal is the best one for your overall financial situation? Think about it: If you like your job, and you stayed at it for just a few more years, you could significantly boost the funds in your 401(k) or other retirement plan, and you might even be able to delay taking Social Security, which, in turn, would result in larger monthly payments.

Put a “price tag” on your retirement lifestyle. When you retire, do you want to travel the world or stay at home pursuing your hobbies? Will you truly retire from all types of work, or will you do some consulting or take up part-time employment? Once you know what your retirement lifestyle might look like, you can better estimate your costs and expenses – and this knowledge will help you determine how much you need to withdraw each year from your various retirement accounts, such as your IRA, 401(k) or other employer-based plan.

Be aware of retirement plan withdrawal rules. It is not enough just to recognize how much you need to withdraw from your retirement plans – you also must know how much you must withdraw. Once you turn 70-1/2, you generally have to start taking money out of your traditional IRA and 401(k). These required minimum distributions, or RMDs, are based on your account balance, age and other factors, but the key word to remember is “required” – if you do not withdraw the full amount of the RMD by the applicable deadline, the amount not withdrawn can be taxed at a 50% rate.

Review your health care situation. When you turn 65, you will likely be eligible for Medicare, but you will want to become familiar with what it does – and does not – cover, so you can establish an annual health care budget. And if you are planning to retire early, which might mean losing your employer-sponsored health insurance, you will need to be prepared for potentially large out-of-pocket costs.

Think about long-term care. One service that Medicare does not cover – or, at best, covers only minimally – is long-term care. If you faced an extended stay in a nursing home, the costs could be catastrophic. A financial professional may be able to help you find a way to reduce this risk.

Develop your estate plans. Estate planning can be complex, involving many different documents – such as a will, a living trust, power of attorney, etc. – so you will want to work with a legal professional to ensure you are making the right choices for yourself and your family.

By checking off these items, one by one, your retirement “to do” list will eventually get “done.” And when that happens, you may find yourself pretty well prepared to enjoy life as a retiree.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

 A couple of years ago as I was running for Speaker of the House, I asked my friend, former Senator Harry Gast, if he had any advice. As he took a drag off his cigarette he said, “Yeah, you would be a really good Appropriations Chair, why would you want the hassle of being the Speaker?” As usual, Harry was right. Being the Chairman of the Appropriations Committee has been the highlight of my career – inside and outside the Legislature.

Current Senator John Proos had similar advice when he said, “Get on Appropriations, that’s where the action is.” I want to thank Senator Proos for always listening as I was bouncing crazy ideas around and navigating the legislative process.

This is my last column, and I want to say thank you for allowing me to serve. Chances are we have not always agreed on every issue. That is a good thing. In the Constitution it says you are supposed to represent all of Michigan. I never imagined having to deal with the nation’s largest municipal bankruptcy in Detroit; saving a pension system burdened with debt and unfunded liabilities; and finding the money to fix our crumbling infrastructure. I hope you sent me to Lansing to solve problems, not vote the party line and play politics. We had several major victories that impacted our community in a positive way; whether it as funding for research for our farmers, saving lives from drug overdoses, finding the dollars for our community colleges, clearing debris in the Paw Paw River, or arm wrestling with the landfill over odors. I took nearly 2,000 votes on your behalf and never missed a single one.

Finally, I want to thank the talented young people who worked for us. If you came to a town hall meeting, you met them. They dug in on the research, worked weird hours, and always told the truth. Harry would be proud. Thanks again.