6 Things You Should Know Before You Retire

Retirement is a time to enjoy what you have worked so hard for. It shouldn't be a time to worry or scrimp just to get by. Here are six things you should know beforehand to help ensure a smooth transition to retirement.

1. How Much You'll Need To Have Saved to Live comfortably

This is a big component of retirement planning. Ideally, you've been dutifully putting money away and are ready to live off the interest for many years to come. If you have been a little lax about saving, now is a good time to calculate how much you'll need to add to your mutual fund to get back on track.

Unfortunately, there is no real magic formula to figure this out. It will depend on several factors, including your age at retirement, your overall health, your expenses, and how you plan to spend your time after retirement.

2. How and When to Apply for Medicare

Because there apparently isn't enough confusion around retirement and health care coverage, enrolling in Medicare is here to challenge you a bit more. There are a lot of rules, regulations, and requirements involved with getting started with Medicare, so be sure to access the resources that are available to you.

Every state has a program to help you navigate the enrollment process. They are called State Health Insurance Assistance Programs (SHIPs). Contact the SHIP office in your state to speak with someone or find an information session nearby.

3. IRA Distribution Rules

If you are relying on money that is invested in an individual retirement account (IRA), then you need to educate yourself about distribution rules. For the most part, you will need to start taking mandatory withdrawals at age 72, although that may vary depending on when you turn 72. These are called required minimum distributions.

Roth IRAs do not have mandatory distributions because you have already paid tax on the contributions. Which brings about an interesting point. The income from an IRA is, most of the time, taxable. Unless you used a Roth IRA account, you did not pay tax on the money you invested and instead opted to pay tax on withdrawals after retirement.

4. Expected Healthcare Costs

You can't know your exact expected healthcare costs, but you can give it a good estimate. For example, if you currently have any chronic conditions or take medications, those are costs you should expect to continue. Insurance that is part of a pension or retirement package can help you narrow it down further if your policy is locked in.

Expect your healthcare costs to increase a little each year, too. Current estimates are that a couple retiring today will need close to $400,000 to cover medical expenses. And that's without considering long term care expenses.

5. Social Security Filing Ages and Benefits

The minimum age for collecting social security benefits is 62. However, your full retirement age depends on when you were born. You must file for benefits, if you are eligible, by the time you turn 70.

There is no right age to start collecting social security benefits. It will depend on factors that are unique to your situation. If you have questions, contact your local social security administration office for assistance.

6. How You Are Planning To Spend Your Time

This is another very personal contributor to your retirement planning. It has a huge impact on how much you will need to save, what type of housing you choose, and even when you retire.

Travel and expensive hobbies can quickly eat into even a sizable nest egg. Also, if you are planning a very active lifestyle post-retirement, you may want to consider saving intensively so you can leave the workforce at a younger age. On the other hand, if you are thoroughly committed to your career and find fulfillment there, you may stay longer and need less put away.

Planning for retirement can seem overwhelming. There is a lot to consider and government programs can be difficult to navigate. Take your time and do your homework before you head to the HR department to help ensure your retirement is a time of relaxation and enjoyment.