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. The question is: Will you have enough money to enjoy a comfortable retirement?
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.
- How much do you need? How much will you receive? The combination of your age and vesting affects the amount of pension you can receive at your desired retirement age. The normal retirement age is 65, but a pension can be drawn earlier with or without reductions based on a variety of criteria. Learn more.
- Contribute to your 401(k). Making elective contributions to a 401(k) account can help you build retirement wealth on a tax-deferred basis and prepare for uncertainties such as inflation and the cost of medical care. Participants can contribute $1 to $9 of their hourly wage. If you are 50 and older, you are allowed to make an additional Catch-Up Contribution of $1 to $3 per hour. Visit our 401(k) Center for information.
- Review your health care options. Coverage is available under the Carpenters Health & Security Plan for retirees and their families if you are receiving a monthly pension check from the Carpenters Retirement Plan and you worked at least 7,500 hours during the 120 months immediately preceding your retirement date. More about Retiree Eligibility.
- Know the rules for post-retirement employment. If retired under the Carpenters Retirement Plan, you are allowed to work up to 480 hours per calendar year in the building and construction industry without a suspension of pension benefits. However, your monthly benefit will be suspended if you work more than 480 hours. Go to Summary Plan Description.
- Remember, it is taxable income. Payments from the Carpenters Retirement Plan and Carpenters Individual Account Pension Plan are subject to federal income tax. You may direct Carpenters Trusts to withhold money from your monthly benefit. Complete this form and return it to Carpenters Trusts. The withholding amount can be changed by you at any time.
- Apply for benefits 60 days before your planned retirement date. The retirement process includes a little paperwork and some very important decisions. The qualifications and requirements are explained in the Summary Plan Description.
- Health Care — Make sure you understand the health care benefits currently offered by your and your spouse's plans. Be aware that benefits under the Carpenters Health and Security 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.
- Social Security — 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. The age at which you can draw unreduced Social Security ranges from age 65 to age 67 based on your date of birth.
- Inflation — One of the greatest risks for a retiree is the danger of outliving 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. Carefully determine how long you can financially support your desired lifestyle in retirement. You might benefit from assistance of Certified Financial Planner or other financial planner.
- Tax Planning — As you make withdrawals from your other retirement savings, carefully plan to do so in a way that minimizes your taxes. Withdrawals are generally taxable events, and it is usually best to delay and minimize as much as possible.
- Diversification — 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. Since it is likely both inflation rates and investment returns will vary considerably over the course of your retirement, it pays to diversify assets in a prudent way. Don't put all your eggs in one basket, and don't assume inflation will remain moderate forever.
- Plans and Documents — Financial planners often recommend creating and/or updating personal plans and documents when you retire. Here is a checklist of items to consider: