The good news about retirement is that advances in science, technology, and living standards have led to longer life expectancies. You can expect longer retirement years than previous generations, which means more time with family and friends and more time to achieve your lifelong aspirations.
Remember to include your family in your retirement planning. They need to know your wishes, especially in regard to topics such as long-term care. Your family can be a great resource for further information and, more importantly, of support.
Good planning will help you avoid the pitfalls that many retirees face, giving you peace of mind as well as a greater probability of a comfortable retirement.
- The normal retirement age is 65, but a pension can be drawn earlier with or without reductions based on a variety of criteria. Please visit the Retirement BenefitTabs to understand how the combination of your age and vesting affects the amount of pension you can receive at your desired retirement age.
- The retirement process includes a lot of paperwork and decisions for you to make. You should review the section of the Retirement SPD titled Application Process. It is critical that you contact the Retirement Department at the Trust Office at least three months before the month you want to retire. When you retire, you must apply to both the Retirement Plan and the Individual Account Plan at the same time.
- Health coverage is available under the Health & Security Plan for retirees and their families provided you are receiving a monthly pension check from the Retirement Plan and you worked at least 7,500 hours during the 120 months immediately preceding your retirement date. See the Eligible Retirees section of the Health & Security SPD for retired Participants for the complete set of requirements.
- Be aware that your monthly retirement benefits may be suspended if you continue to work in the construction industry after your retire. See the Post-Retirement Employment and Suspension of Benefits section of the Retirement SPD for the complete rules.
- If you are taking any lump sum distribution from a pension plan, read carefully the Special Tax Notice concerning eligible rollover distributions. In short, most lump sum distributions are subject to mandatory 20% Federal tax withholding unless the lump sum is directly rolled over into an IRA or another qualified retirement plan. Note also that tax penalties apply to lump sum retirement distributions received before you reach age 59 1/2.
One of the greatest risks for you as a person retiring today is considered to be the danger that you may outlive your assets. This is because of several factors: inflation, increased longevity, hyperinflation of medical expenses, and the costs of long term care if you survive into your 80's and 90's. Unlike Social Security, your pension benefits from the Trust do not increase with inflation. So, you need to carefully determine how long you can financially support your desired lifestyle in retirement. You may want to get professional assistance in making this determination from someone like a Certified Financial Planner or other financial professional.
As you make withdrawals from your retirement savings, carefully plan to do so in a way that minimizes your taxes. Withdrawals from tax-advantaged accounts (401/IRA, SEP, KEOUGH, etc.) may be arranged so that they take advantage of continued tax free build up. Withdrawals are generally taxable events, and it is usually best to delay and minimize such withdrawals as much as possible.
Periodically review how your assets are allocated between various categories such as stocks, bonds, real estate and savings accounts. Studies have shown that investors have a "short memory" and invest as if the economy of the last 1-3 years will continue into the indefinite future. But in fact, the last few years have had unusually bad returns in the stock market while inflation has continued to be moderate (except in health care costs). Since it is likely that both inflation rates and investment returns will vary considerably over the course of your retirement, it pays to have the assets which are under control diversified in a prudent way. Don't put all your eggs in one basket, and don't assume that inflation will remain moderate forever.
Make sure you understand the health care benefits currently offered by your and your spouse's plans. Be aware that benefits under this plan are not vested and could, under certain circumstances be reduced, changed or even eliminated. The years just prior to Medicare eligibility are generally the most expensive for private health insurance.
Coordinate the receipt of your Social Security with your plans for any work after retirement and other sources of income. The assistance of a financial professional may help you to figure the optimal time to begin taking Social Security given your individual circumstances. Note that the age at which you can draw unreduced social security ranges from age 65 to age 67 based on your date of birth.
As you plan how you will spend your time in retirement, consider part-time work and volunteer work, but be aware of the rules affecting your pension if you return to work in covered employment. Part time work can be very helpful in preserving your retirement assets.
Financial planners recommend that if you have not already done so, that at retirement you should update a number of personal plans and documents. Here is a checklist of some items which you may need to update, revise, or consider:
Health & Security SPD
- Normal, Early and Disability Retirement
- Application Process
- Post-Retirement Employment and Suspension of Benefits
Individual Account SPD
Health & Security SPD for Retired Participants
- Notice to Decline Coverage Agreement
- Federal Income Tax Withholding
- IRA Distribution
- Application For Direct Deposit
- Special Tax Notice Regarding Plan Payments