STAGE FOUR: RETIREMENT

Active Retirement: You Earned it, Now Make the Most of it!

You’ve worked hard for a long time and earned your day in the sun. Proper planning helps ease the “golden years” but it’s not yet time to just ride off into the sunset


I’m Bored…Should I Take on a New Job?

People take on new jobs after retirement for lots of reasons. If you’re used to filling eight hours a day with work, you may appreciate the structure of a post-retirement career.

  • You may decide to take on a new part-time job if you need a little extra income to improve your lifestyle or the health insurance that comes with it.
  • Maybe you want to give back and volunteer for a local non-profit organization. Giving back to your community is a great way to feel a sense of purpose.
  • Thinking of starting your own business? Now you finally have the time to turn that hobby into something more. MHV has Small Business Banking products to fit your needs
  • Keep in mind with a new job the money you make can cut into your Social Security income. How much is very much dependent on your age. If you are under full retirement age, Social Security will deduct benefits for every dollar you earn over a certain amount (in 2010, that amount is $14,160). If you will reach your full retirement age this year that amount gets higher. Starting with the month you actually reach full retirement age, the limit on earnings goes away. It’s complicated, but Social Security offers lots of useful information and tools on its website.


What is the difference between “retirement age” and “full retirement age”?

These are terms used by Social Security to identify when you begin to receive benefits.

  • If you were born in 1937 or earlier, your full retirement age is 65. If you were born after 1960, your full retirement age is 67.
  • The earliest you can receive retirement benefits is 62. If you choose to retire at 62, you will receive reduced benefits to reflect the extra months they are being paid out. Social Security has a simple online calculator to determine your exact retirement age and penalties for early retirement.

Take Time to Review your Insurance Needs

If your employer has been paying for your health insurance, you’re likely in for a big adjustment at retirement – you’ll read all about it in the section below.

  • You should also give thought to your homeowners or renters insurance. Has the amount kept pace with the replacement cost of your home and personal property? Is your umbrella policy large enough to protect your assets against liability?
  • Also, this is a time for taking a hard look at that life insurance policy. If your children are grown and your spouse isn’t depending on your income, you may not want to continue paying that monthly expense.
  • Check out MHV’s array of Insurance Products that can help you to protect your assets.

Health Insurance Considerations

As we age, our health care needs tend to increase. Yet, ironically this may be a time when we can least afford it.

  • It’s a rare employer who will continue to pay for health insurance after retirement. Most likely, you’ll need to buy a private health insurance policy (which will be costly) or extend your employer-sponsored coverage through COBRA (also not inexpensive).
  • At age 65 you’ll probably be eligible for health benefits from Medicare. However, there will still be out-of-pocket costs such as deductible and co-payments that you will be responsible for. Unless you can afford to pay for these things yourself you may want to buy a Medigap policy. These come in 12 standard options offering various benefits at different price points.
  • Since Medicare won’t pay for long-term care should you need it, many people nearing retirement also look into purchasing Long Term Care Insurance (LTCI). A good LTCI policy can cover the cost of care in a nursing home, an assisted-living facility or even care in your own home. You should purchase your policy as early as possible – the younger and healthier you are, the less the premiums. If your assets and/or income are low enough you may also be able to use Medicaid to cover long-term care.

Protecting your Assets

You've worked hard to accumulate the things you have. Of course, you want to make sure your wealth stays in your pocket or your family’s. The following are steps you can take to protect your assets from tax collectors, credit card issuers, or other’s insurance companies or creditors. Check out MHV’s range of Insurance Products that can help you to protect your assets.

  • Liability insurance is an important and cost-effective tool. This is the umbrella coverage on your homeowner’s policy. If you don’t have such a policy, and you have substantial assets to protect, you should get one.
  • A Declaration of Homestead is a document that protects a portion of the equity in your home from creditors who have obtained a judgment against you (it doesn’t, however, provide protection from foreclosure). Just fill out a simple form, pay a small fee and file it at the registry where your deed is recorded.
  • Splitting up your assets can help protect you or your spouse if one of you has a greater exposure to potential liability (for example, a physician who might be sued). By putting sole ownership of your investments and valuable assets in the other spouse’s name you can protect them from creditors.
  • Irrevocable Trusts are a tried and true way to protect your assets. In this case, the trust becomes the owner of your property. Once that is done, the assets are no longer yours so they cannot be used to settle claims against you. There are many types of trusts each with its own benefits. Talk with a trust advisor to see which is best for you.

Estate Planning

It makes no sense to go through a lifetime of planning and saving, and then pass on without a will or trust that provides instructions for transferring your estate on to your heirs. Unless you want to leave this task to courts and lawyers, you’ll need to do some estate planning.

  • The first question to ask yourself is, do you need a trust or will a will suffice? A will is a legal document stating your wishes – who gets what. If your estate is small enough that formal probate won’t be required and you don’t expect substantial tax burdens on your estate a will should be adequate. However, if you have a larger estate you’ll want to create a trust – a legal entity or device used to take care of your property – to distribute your assets.
  • Once you decide on a will or trust, you can turn your attention to serious matters such as what will happen if you become incapacitated? Who will inherit your estate? Do you want to start transferring assets, tax-free, now? Do you want to hold your assets in joint tenancy or name a beneficiary? What happens if you divorce? If your spouse dies? If you’re sued? Because it is such a complex and important subject, you should seek out the advice of an estate planning expert.

If you Become Incapacitated

As unpleasant as it is to think about, you or your spouse could come to a point where life-and-death decisions need to be made – by others. People have strong feelings about how they want to live out the end of their days and a number of legal options are available to ensure these wishes are carried out. Here are the most common. Please note that not all are valid in every state, so you should consult an attorney.

  • A Durable Power of Attorney for Health Care or Health-Care Proxy allows you to choose a representative to act on your behalf and make medical decisions based on the current circumstances. However, since your representative must be present to act on your behalf, it may not be useful in an emergency.
  • A Living Will is a document that states your decisions regarding medical care, without relying on any one person to carry out your wishes. Generally, living wills are only used to make decisions on life-sustaining medical treatment and can only be used if you’re terminal or in a persistent vegetative state. It’s important to know that emergency medical personnel usually cannot withhold care based on a living will.
  • A DNR (Do Not Resuscitate) Order allows you to decline CPR in the case of a cardiac or respiratory arrest. DNR orders are generally used only in hospital settings.
  • A Durable Power of Attorney (DPOA) allows you to control who acts for you and what they can do with your property. This is a low-cost alternative, but some states will not permit DPOAs under certain circumstances.

Death of a Spouse

Losing a life partner is one of the hardest things you may ever go through. On top of dealing with your grief, the stress of having to settle their estate and organize your own finances can be overwhelming. Here’s an ABC guide to surviving the first few weeks.

  • First notify anyone who might be able to help you with funeral preparations.
  • Next gather together all your spouse’s important papers including will, birth certificate, marriage license, life insurance policy, etc. Set up a filing system so you know where to find them – if possible, enlist a friend to help you do this
  • Then contact your attorney and financial advisors, insurance companies, Social Security (if applicable) and other agencies to find out how you can file for survivor’s benefits. You will find them a wealth of information. Tip: keep a phone log of who you have contacted and what you’ve found out.
  • Your funeral director can also be a source of advice. He or she will know how to obtain a death certificate, which you will need to file claims.
  • Take care of immediate expenses. Your spouse may have had outstanding debts that need to be settled and you will have funeral costs to handle. If your spouse had life insurance and you are named as beneficiary you may be able to get the proceeds very quickly or the insurance company might give you an advance against the settlement. Creditors may also be willing to let you postpone payments for 30 days or more, if necessary.
  • Don’t do anything in haste. You may be tempted to sell your house or blow your savings on a cruise because you can’t imagine staying where you are. You might even be pressured by con-artists or people wanting a piece of your spouse’s estate. Remember that you are emotionally vulnerable right now and it’s a good idea to take some time before making important decisions. Run these ideas by a neutral friend or financial advisor until you are feeling more grounded.


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