As you approach retirement, you’ll undoubtedly have many questions, and the answers can vary depending on your employer and your retirement timeline. To ensure a smooth transition, it’s best to gather pertinent information from your employer, but where to begin? Here are five questions to consider as you prepare for retirement.
What Is My Official Retirement Date?
The day your organization formally accepts you as a retiree is called your official retirement date. This date has the potential to make a big difference in the weeks immediately following when you retire, especially when it comes to group benefits.
For instance, if your retirement date is recorded as January 3, 2025, instead of December 31, 2024, your medical coverage might extend into January 2025. Knowing this date helps you plan for Medicare and Medicaid Supplement Plans and ensures you are not caught off guard by expected gaps in coverage.
Do I Have a Retirement Agreement? If So, What Are the Terms?
There’s a chance you don’t have a contract with your employer regarding your work, but if you’re confused, talk to your human resources department. These contract provisions, such as non-compete clauses, might be critical to your planning. It’s also wise to discuss the agreement with a financial advisor to fully understand its implications.
What Happens to My Health Benefits?
One of the most essential things to consider as you approach retirement is how your health insurance will change. This will partly be determined by your employer’s rules. Find out if your employer offers group health insurance benefits after retirement. If they do, be prepared to pay a higher premium.
If your employer doesn’t provide post-retirement health insurance, you will need to explore individual policies, which can be costly, especially if you have preexisting conditions. Additionally, if you have a health savings account (HSA), learn how to utilize the funds for health-related expenses post-retirement.
If you have a health savings account, read our blog for more information on using the money saved in that HSA for health-related expenses after you’ve retired.
What Happens to My Employee Stock Options?
Suppose you have employee stock options from your company. In that case, it’s essential to know how they’ll be treated when you retire. This is especially important to note whether vesting will continue or cease on your resignation date. Find out what will happen to any unvested shares upon your departure. Will the value of those be forfeited? Unvested shares can hold significant value, so understanding their fate is crucial. Stock options can be a tough nut to crack when it comes to retirement planning. It may be worth consulting with your financial advisor for assistance.
What Happens to My 401(k)?
For most retirees, the 401(k) is a significant part of their retirement savings. If you retire and your 401(k) balance exceeds $5,000, your employer is required by law to keep your account open. You can also choose to transfer those funds elsewhere. You won’t have to take anything out until you’re 73. This is the age at which you must start taking out payments or required minimum distributions (RMD). However, if your account balance is less than $5,000, an automatic lump-sum distribution will occur.
All retirement savers’ circumstances are different, so make sure to consult your employer about the specifics of your benefits. For more insights and tips on retirement planning, visit the Slavic401k blog.
