Now more than ever, employees are turning to the workplace for information and tools to help with financial wellness. Employees nearing retirement will benefit from the information to support their planning efforts. Plan sponsors are also advised not to neglect their own retirement plans!
How much money we need in retirement depends on how and where we plan to live. While we want to be prepared for emergencies and to live a healthy and happy older age, the adage that we can’t take our money with us when we go is also true. As the possibility of retirement approaches, it’s a good idea to clarify plans and tie them to a budget. U.S. News & World Report advises:
Try to make a budget that details your expected income from Social Security, pensions, retirement savings, other investments and part-time work. Then estimate how much you’re going to spend. The estimate may have contingencies, such as spending less by moving to a lower-cost community or spending more if you’re planning to travel, but you should have some idea of what your expenditures are going to be, at least for the next few years. Don’t forget to include an emergency fund in case of unexpected bills like a medical emergency or major home repair.
Experts also advise those approaching retirement to be informed about Social Security and Medicare benefits:
You’re eligible to claim Social Security payments beginning at age 62. However, you will receive a reduced payment unless you begin collecting benefits at your full retirement age, which varies depending on when you were born. For example, the full retirement age is 66 and 10 months for people born in 1959.
You can increase your monthly payments if you sign up for Social Security after your full retirement age. Each year you wait, your monthly benefit grows by about 8%, up to age 70.
Medicare coverage begins at age 65, regardless of your Social Security full retirement age. When you enroll in the program you will need to make decisions about Medicare supplement plans and prescription drug coverage or Medicare Advantage plans.
Of course, plan sponsors are responsible for ensuring retiring employees have the information they need about their 401(k) accounts. Typically, employers allow retirees to keep the 401(k) account with the company, though some retirees may choose to transfer the money to an IRA or Roth IRA.
Uh-Oh: Spent Your Retirement Funds?
One day, you’ll retire too! As a plan sponsor, don’t forget to protect your personal assets. Any individual involved in the management of a retirement plan can face personal exposure for breach of fiduciary duty. Even allegations of a fiduciary breach can divert attention and resources from your work, life—and retirement plans.
For example, If you suddenly need an attorney with ERISA expertise, you would likely pay upwards of $500—per hour! Yikes! Avoid this possibility—and a lot of other stress—with Colonial Surety Company’s affordable Fiduciary Liability insurance.
Available with a complete ERISA Bond Package, a whole year of Fiduciary Liability coverage is less than what you’d pay for one hour with that lawyer if a crisis hits. Plus, Colonial’s 2 and 3-year packages also include Cyber Liability coverage to protect your business and retirement plan in the event of a cyber breach.
Remember: the required ERISA bond protects the assets of the retirement plan from theft; Fiduciary Liability coverage protects you and your assets from personal liability; and, Cyber Liability coverage can safeguard your company and plan from covered losses and expenses in the event of a cyber breach.
With Colonial, you can easily and affordably secure this complete coverage package.
Colonial Surety Company is rated “A Excellent” by A.M. Best Company, U.S. Treasury listed and in business all across the country.