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What Should You Financially Focus on as You Near Retirement?
If you’re 55 or older and employed at a university in Idaho, retirement is likely to be on your mind. You’ve dedicated years to shaping minds and supporting education, and now it’s time to ensure that your financial future is as secure as possible. Whether retirement is just around the corner or still a few years away, taking the right financial steps now can help you transition smoothly into your next chapter. Planning for retirement involves more than just saving money—it’s about making informed decisions that will impact your lifestyle, healthcare, and long-term financial security. The more prepared you are, the more confidently you can step into retirement.
Here’s what you should financially focus on as you approach retirement.
1. Maximizing Your Retirement Savings
If you participate in the Public Employee Retirement System of Idaho (PERSI) or a 403(b) or 457(b) plan, now is the time to boost your contributions. Employees 50 and older can take advantage of catch-up contributions, which allow you to save more than the standard limits.
• PERSI Members: Check your Base Plan estimates to see what your monthly pension benefit will be at different retirement ages. You can also explore the Choice 401(k) Plan to increase your savings.
• 403(b) & 457(b) Plans: These employer-sponsored plans allow higher contributions after age 50, making them excellent tools to grow your retirement nest egg.
• Employer Matching Contributions: If your university offers a match for 403(b) or 457(b) contributions, ensure you’re contributing enough to take full advantage of the match.
• Tax Considerations: Traditional retirement accounts reduce your taxable income today, but withdrawals in retirement will be taxed. Roth options, if available, allow tax-free withdrawals later.
💡Pro Tip: If you’re within five years of retirement, consider shifting some of your savings into more stable investments to protect against market fluctuations.
Action Step: Log in to your retirement account and review your contribution levels. Consider increasing them if you have room in your budget.
2. Understanding Your Healthcare Costs
Healthcare can be one of the biggest expenses in retirement. As a university employee in Idaho, you may have access to retiree health insurance options, but it’s essential to understand the costs.
• Medicare Eligibility: If you’re 65 or older, you’ll need to enroll in Medicare Parts A & B and consider additional coverage like a Medicare Supplement or Medicare Advantage Plan.
• Retiree Health Plans: Some university employees may have the option to continue health benefits through a retiree health plan. Check with your HR department to see what’s available.
• Long-Term Care Insurance: Consider whether long-term care insurance is right for you. It can help cover assisted living or nursing home expenses, which Medicare does not cover.
• Health Savings Account (HSA): If you have an HSA, keep contributing while you’re still working. These funds can be used tax-free for qualified medical expenses in retirement.
Did You Know? The average retired couple may need $300,000+ to cover healthcare expenses throughout retirement. Planning now can help you avoid unexpected financial burdens later.
Action Step: Research your healthcare options and estimate your future medical expenses. If you plan to retire before 65, explore how you’ll cover health insurance until you’re eligible for Medicare.
3. Creating a Realistic Retirement Budget
Your spending habits will likely change in retirement. Creating a budget that reflects your future income sources—such as PERSI pension payments, Social Security, and personal savings—can help you avoid financial stress.
• Identify Your Fixed Expenses: Housing, utilities, healthcare, and insurance will still be regular costs.
• Plan for Variable Expenses: Travel, hobbies, and entertainment may increase, so budget accordingly.
• Adjust for Inflation: Prices will rise over time, so ensure your savings can keep up.
• Emergency Fund: Maintain a cash reserve of at least 6–12 months' worth of expenses to cover unexpected costs.
💡Tip: Many retirees spend more in their first few years of retirement as they travel and enjoy their newfound freedom. Plan for this in your budget!
Action Step: Create a retirement budget and compare it to your projected income. If there’s a gap, consider working a little longer or adjusting your spending plan.
4. Deciding When to Claim Social Security
Your Social Security benefits increase the longer you wait to claim them, up until age 70. While you can start as early as 62, delaying your benefits can significantly boost your monthly payments.
• Full Retirement Age (FRA): If you were born between 1955-1960, your FRA is between 66 and 67. Claiming benefits before this age will reduce your monthly payment.
• Delaying Benefits: Waiting until age 70 increases your benefit by about 8% per year after FRA.
• Spousal & Survivor Benefits: If you’re married, coordinating with your spouse on when to claim can maximize your household benefits.
• Working While Collecting Social Security: If you claim benefits before FRA and continue working, your benefits may be reduced if your earnings exceed a certain limit.
💡Reminder: Social Security is only designed to replace about 40% of your pre retirement income, so it’s crucial to have additional savings.
Action Step: Use the Social Security Administration’s benefits calculator to estimate your monthly payments at different claiming ages.
5. Reviewing Your Estate Plan
Having a solid estate plan ensures your assets are distributed according to your wishes and can prevent legal complications for your loved ones.
• Update Your Will & Beneficiaries: Make sure your will reflects your current wishes and that your retirement accounts and life insurance policies have the correct beneficiaries.
• Consider a Trust: If you have significant assets, a trust can help protect your estate from probate and provide tax advantages.
• Create or Update Power of Attorney Documents: These ensure someone you trust can handle financial and healthcare decisions if you become unable to do so.
• Review Tax Implications: Idaho does not have an estate tax, but federal estate tax laws could apply if your estate is large enough.
💡Pro Tip: Regularly review your estate plan, especially after major life events like marriage, divorce, or the birth of a grandchild.
Action Step: Schedule a meeting with an estate planning attorney or financial advisor to review your documents.
6. Exploring Phased Retirement or Part-Time Work
If you’re not quite ready to fully retire, Idaho universities may offer phased retirement programs or part-time opportunities. This can help ease the transition both financially and emotionally.
• PERSI Retirees: If you return to work for a PERSI employer, be aware of potential restrictions on receiving benefits while employed.
• Adjunct or Consulting Roles: Many universities offer part-time teaching or consulting opportunities that allow you to stay engaged while supplementing your income.
• Starting a Small Business or Side Gig: Many retirees explore consulting, freelancing, or even starting a passion project for extra income.
Action Step: Talk to HR about phased retirement options or explore part-time work opportunities within the university.
Final Thoughts
Retirement is an exciting milestone, but it requires careful financial planning to ensure stability and peace of mind. By focusing on retirement savings, healthcare, budgeting,
Social Security, estate planning, and possible phased retirement, you can set yourself up for a comfortable and fulfilling next chapter.
If you have questions about your specific benefits, reach out to Idaho State University’s HR or Benefits Office for guidance. Taking the right steps now can help you transition into retirement with confidence.
Additionally, the Professor Retirement System is a valuable resource for university employees navigating these complex decisions. They offer expert advice on pension benefits, investment strategies, and retirement income planning, helping ensure you make informed choices that align with your goals. If you're feeling uncertain about your next steps, consider scheduling a consultation with them to get personalized guidance.
Ready to take action? Start reviewing your financial plan today! 🚀
Intermountain Wealth Management is a Registered Investment Adviser (RIA). The company manages several fee-based portfolios comprised of various equity and fixed-income investments that may include mutual funds and exchange traded funds. This is not a prospectus or an offer to sell any security. Please read the prospectus of any investment before you invest. Information included here is intended for education and information purposes only.
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