Near Retirement

Nearing Retirement

Planning to retire in 10 years or less? Find out what you need to know and do for a smoother transition.

 How to make sure you're on track

The closer you get to retirement, the more important it is to be realistic about your goals and savings. By taking a close look at where you stand now, you can make changes to stay on track—or catch up if you need to.

Here’s what we recommend :

  • Check and update your plan

    If you don’t have a retirement plan, now is the time to create one. If you do, check it at least once a year to make sure it matches your needs and goals.

    ▪️Your expected retirement date

    ▪️How long you expect to be retired

    ▪️Your expected expenses (for needs, wants and wishes)

    ▪️Your expected savings and income sources

  • Update your portfolio

    Make sure your portfolio still makes sense for you by checking it at least once a year, too.

    Things that can change as you near retirement include:

    ▪️How much risk you're comfortable with

    ▪️Your asset allocation Tooltip

    ▪️Diversification Tooltip of investments in your portfolio

    ▪️Your plan for regular rebalancing Tooltip

  • See where you stand

    Enter information from your plan into our retirement savings calculator to see how you’re doing and catch any gaps now.

 What to do if your savings need a boost

Whether you’re in catch-up mode or just want to sock away as much as possible before you stop working, there are things you can do to help your nest egg grow. 

First, contribute as much as you can to your employer-sponsored account—401(k), 403(b), 457(b) or Thrift Savings Plan. In 2019, you can contribute up to $19,000. If you're at least 50 or will be by year's end, you can also make a catch-up contribution of $6,000, for a total of $25,000.1 

Once you’ve maxed out your employer-sponsored account—or if you don’t have one—consider saving and investing more with a traditional or Roth IRA or a brokerage account. If you’re eligible, you can also use a Health Savings Account (HSA) to save for future health care costs.2  

Learn more about your account options, including tax and eligibility information.

 Key facts about Social Security

The age you become eligible for Social Security—also called your full retirement age—depends on when you were born.

Screen Shot 2021-09-29 at 2.59.58 PM.png

Did you know waiting can increase your benefit?

Once you start taking Social Security, you’ll receive monthly checks for as long as you live. You can start taking it as early as age 62. But you’ll receive a smaller check each month than you will if you wait until your full retirement age. 

If you wait until after your full retirement age, your Social Security income will increase up to 8% for every year you delay, up to age 70. After age 70, there’s no further increase for delaying. 

Learn more about how to decide when to take Social Security benefits.

How to plan for future health care costs

Wondering about the best way to cover retirement health care costs? Medicare Tooltip  is a big piece of the puzzle—but it doesn’t start until age 65, won’t cover everything, and has out-of-pocket costs. Tooltip

With Medicare or other health insurance, your costs will include insurance premiums and out-of-pocket expenses your insurance doesn’t cover, like a deductible Tooltipco-pays Tooltip  and coinsurance. Tooltip

In general, here's what you can expect to pay before and after Medicare kicks in:

 

Source: Schwab Center for Financial Research. These estimated costs are for general informational purposes only and should not be considered an individualized recommendation or a personalized estimate. Your health care costs will depend on a number of factors, including inflation and your specific situation. For specific advice, we recommend consulting with a financial planner.

Here are five things you can do now to prepare for retirement health care costs.




How to transition from saving to living off your savings

Many people say the transition from saving to living off their savings is one of the biggest challenges of retirement, due (at least in part) to complex tax rules and uncertainty around how long their money will last.

The key to making it smoother? Planning. But where should you start? 

Here’s what we recommend, before you retire: 

  • Get to know your retirement income sources

    Include all retirement, bank and brokerage accounts, plus other income (like Social Security, a pension, annuities or HSA funds you’ve saved for future health care costs). Make sure you know:

    • How much you’ll receive from each source

    • When you can withdraw your money (take distributions) without a penalty

    • How each source will be taxed

  • Take a close look at your expenses

    Include money for needs (like food, housing and health care), wants (like travel and entertainment) and wishes (like gifts or a second home). Ask yourself:

    • Should I pay off my debt or mortgage before I retire?

    • Should I relocate or downsize to reduce costs?

    • Am I considering health care costs (before and after age 65)?

  • Start planning your retirement income

    Income and expenses are a good place to start. But to make sure your money will last as long as you need it to, you’ll need a more comprehensive plan. Your plan should help you determine:

    • How much you can spend

    • How to invest

    • How to get your money when you need it

    • How to stay on track over time

    To connect all the dots in tax-smart ways, consider working with a financial planner, tax advisor or both.

 What you can do next

  • Use our guide to create a retirement plan.

  • Find out if our traditional, Roth or rollover IRA is right for you.

  • Get help with your plan and portfolio from our robo advisor.

 

 Important Disclosures 

1 Contribution limits change slightly each year and may vary by plan. For specific information about your employer-sponsored retirement plan, see your benefits website or contact your Human Resources department. 

2 Eligibility rules apply to Roth IRAs and Health Savings Accounts. 

Withdrawals from an IRA or qualified retirement plan are subject to ordinary income tax. Prior to age 59 ½, they may also be subject to a 10% federal tax penalty. 

Diversification and rebalancing a portfolio cannot ensure a profit or protect against a loss in any given market environment. Rebalancing may cause investors to incur transaction costs and, when rebalancing a nonretirement account, taxable events may be created that may affect your tax liability. 

Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

The information provided is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner or investment manager.

 

0719-9PKL