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June 24, 2020
Retiring Within 10 Years? Five Tips to Prepare
If you’re a decade or so away from retirement, you’ve probably spent at least some time thinking about this major life change. How will you manage the transition? Will you travel, take up a new sport or hobby, and maybe spend more time with friends and family? Should you consider relocating? Will you continue to work in some capacity? Will changes in your income sources affect your standard of living?
When you begin to ponder all the issues surrounding the transition, the process can seem downright daunting. Thinking about a few key points now, while you still have years ahead, can help you focus your efforts and minimize the anxiety that often accompanies retiring.
1. Reassess your living expenses.
A step you will probably take several times between now and retirement—and maybe several more times thereafter—is thinking about how your living expenses could or should change. For example, while commuting and other work-related costs may decrease, other budget items may rise. Try to estimate what your monthly expense budget will look like in the first few years after you stop working. Then, continue to reassess this budget as your vision of retirement becomes reality.
2. Consider all your income sources.
First, figure out how much you stand to receive from Social Security. The amount you receive will depend on your earnings history and other unique factors. You can elect to receive retirement benefits as early as age 62, but doing so will result in a reduced benefit for life. If you wait until your full retirement age (66 or 67, depending on your birth date) or later (up to age 70), your benefit will be higher. The longer you wait, the larger it will be.1 You can get an estimate of your retirement benefit at the Social Security Administration website, ssa.gov.
Next, review the accounts you’ve earmarked for retirement income, including any employer benefits. Consider your employer-sponsored plan, IRAs and traditional investment accounts you may own. Try to estimate how much they could provide on a monthly basis. If you are married, be sure to include your spouse’s retirement accounts too.
Do you have rental income? Be sure to include that in your calculations. Might you continue to work? Some retirees find that they are able to consult, turn a hobby into an income source or work part-time. Such income can provide a valuable cushion that helps retirees postpone tapping their investment accounts.
3. Pay off debt and power up your savings.
Once you have an idea of what your possible expenses and income look like, it’s time to bring your attention back to the here and now. Draw up a plan to pay off any debt and power up your retirement savings before you retire.
Why pay off debt? Entering retirement debt-free will put you in a position to modify your monthly expenses in retirement if the need arises. On the other hand, entering retirement with a mortgage, loan or credit-card balances will put you at the mercy of those monthly payments.
Why power up your savings? In these final few years before retirement, you’re likely to be earning the highest salary of your career. Why not save and invest as much as you can in your employer-sponsored retirement savings plan or IRAs?
4. Manage taxes.
As you think about when to tap your various resources for retirement income, remember to consider the tax impact of your strategy. For example, you may want to withdraw money from your taxable accounts first to allow your employer-sponsored plans and IRAs more time to benefit from tax-deferred growth. Keep in mind, however, that generally you are required to begin taking minimum distributions from tax-deferred accounts once you reach age 72, whether or not you actually need the money. Roth IRAs are an exception to this rule.2
Managing retirement income to result in the best possible tax scenario can be extremely complicated. Qualified tax and financial professionals can provide valuable insight and guidance.3
5. Account for health care costs.
As you age, the portion of your budget consumed by health-related costs will likely increase. There isn’t much in life that’s more complex or cumbersome than reviewing insurance plans and coverage options, so take the time now to start learning about your health insurance options. Visit medicare.gov to understand coverage options. Since there will likely be deductibles, copayments and coinsurance to pay for, Medigap policies and Medicare Advantage plans are available to provide supplemental coverage if needed. Start browsing and understanding your options at least a few months before retiring.
Consider a course of action for if you or your spouse may need home care, nursing home care or other forms of long-term assistance, which Medicare and Medigap will not cover. Long-term care costs vary substantially depending on where you live and can be extremely expensive, so it’s wise to begin preparing for this possibility now. Learn more about preparing for long-term care.
Questions? Contact a CFS Financial Advisor.
Grow has contracted with CUSO Financial Services, L.P. (CFS) to provide investment services, and your CFS Financial Advisor will help you build a plan that meets your needs. The advisor will look at your current spending, saving and investing, learn about your goals and priorities, make objective recommendations and support your efforts moving forward through the implementation and management of your plan.
1Note that if you work while receiving Social Security benefits and are under full retirement age, your benefits may be reduced until you reach full retirement age. 2Due to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, required minimum distributions (RMDs) are waived in 2020. 3Working with a tax or financial professional cannot guarantee financial success.
Non-deposit investment products and services are offered through CUSO Financial Services, L.P. (“CFS”), a registered broker-dealer (Member FINRA/SIPC) and SEC Registered Investment Advisor. Products offered through CFS: are not NCUA/NCUSIF or otherwise federally insured, are not guarantees or obligations of the credit union, and may involve investment risk including possible loss of principal. Investment Representatives are registered through CFS. The Credit Union has contracted with CFS to make non-deposit investment products and services available to credit union members. For specific tax advice, please consult a qualified tax professional.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020.
How to Find Your Routing & Account Numbers
When you make a payment online, by phone or on a mobile device, you may be asked for our routing number and your checking account number. Credit unions and banks use these numbers to identify accounts and make sure money gets where it’s supposed to be. You’ll also need to provide your routing and checking account numbers for:
- Direct deposits
- Electronic checks
- Military allotments
- Wire transfers
Where to Find Your Routing & Checking Account Numbers
Your personal checks include both our routing number and your account number, as shown on the Grow check example below.
Don’t have a Grow check? No worries.
Visit any Grow store and ask for a Direct Deposit Form. It lists both your routing number and checking account number.
Making a Loan Payment
When it comes to making payments, we try to make it as painless as possible to pay your loan every month. We have several different ways to pay, including convenient online options.
You have two ways to pay online by transferring funds from another bank or credit union.
- Grow Online Banking (Preferred payment method for any loan)
This is the simplest way to pay your loan. You can make one-time payments or set up automatic recurring payments in Grow Online Banking. Once you log in, select “Transfer/Payments” from the menu. If you’re not enrolled in Grow Online Banking yet, you can set up your account in just a few minutes.
- Debit Card or ACH (Available for auto, personal and home equity loans and HELOCs)
Note: ACH and debit card payments are not available for credit cards or most mortgages, except HELOCs.
We accept ACH payments with no additional fees or Mastercard® and Visa® debit cards with a convenience fee of $4.95. To get started with an online ACH or debit card payment, select Pay Now below.
Pay by Mail
You can also pay any Grow loan by check through the mail. Please remember to include your account number and Grow loan number on the check. (For credit card payments, please do not write your 16-digit credit card number on the check, which can cause a delay in processing the payment.)
Address for auto, credit card and personal loan payments:
Grow Financial Federal Credit Union
P.O. Box 75466
Chicago, IL 60675-5466
Address for mortgage and home equity payments:
Grow Financial Federal Credit Union
P.O. Box 11733
Newark, NJ 07101-4733