Berks County Medical Society Medical Record Fall 2021 - 36

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Stepping into Retirement:
Top 10 Items to Help You Prepare
by Thomas K. Williams, CFP®, CPA, Domani Wealth Partner and Senior Wealth Advisor
Michael J. Dinan, CFP®, Domani Wealth Partner and Senior Wealth Advisor
Are you ready to retire in the next
several months or upcoming years?
If you are looking ahead with joy and
expectation to realizing your retirement in the
near future - congratulations! You may also be
asking yourself: What do I need to do to be
ready for this next step? If you, your friend, or
a loved one is reaching the finish line on the
career stage of life, here are some items for you
to review and share!
How to prepare for retirement:
1. Ownership Transition: If you are a
physician who owns a practice, it's important
to have a plan in place to transition your
practice and work with professionals who
may assist you in valuing the practice. It's
possible you will sell the practice to another
group, who will take care of your patients
and transition the ownership. This review
and planning should begin a few years before
retirement.
2. Health Insurance: You will need to
determine how you will receive health
insurance after retirement. You will likely
have the option of Medigap coverage or
Cobra available to you. Will you have
Medicare available, and will supplemental
health insurance be needed?
3. Medicare Premiums: You will need to
understand how Medicare premiums work.
As you retire, you can file a life event change
of status for your Medicare premiums. By
doing this, your monthly payment will not
be based on your previous, paycheck-based
income from two years prior, but rather will
be adjusted to your current income, which
could save you hundreds of dollars a month.
4. Disability Policies: It's possible you may
have a supplemental disability policy as a
physician available to cover your income in
the event you became disabled. If you are
retiring, it is important to cancel the policy
upon retirement, since you should no longer
need this coverage.
5. Part-Time Work: Many physicians
retire and work on a part-time basis. The
arrangement can help provide coverage for
other physicians during their paid time off,
or to assist with a high case load at a hospital
36 | w w w .berkscms .or g
or medical practice. If this is what you are
considering, think through the amount
of income you will earn as a part-time
employee. This will be an important factor
in whether you want to begin taking social
security or delay the payments until after you
are no longer working. There are earnings
limitations in place that may require you to
repay part of your social security if you are
not at " full retirement age. " This is something
to be carefully reviewed and planned for with
your financial planner.
6. Social Security: Are you eligible to begin
taking Social Security, and if so, when is the
optimal time? Collecting these payments
at the right time can affect several financial
factors in your life.
7. Pension Plans: Learn the details of any
pension payments or defined benefit plan
payments you are eligible to receive. The
details surrounding your payout can be
complex, and there are often several options
to structure the payout. If you are married,
should you select the joint payout option to
also include an annuity for your surviving
spouse if something were to happen to
you? Is there a guaranteed term to the plan?
Reviewing the risks and benefits of each
payout plan will be beneficial.
8. Employer Retirement Plans: Take the
right steps for any employer-based 401(k) or
403(b) plans: What elections do you need to
make? Do you plan to rollover the amount
from those plans into an individual IRA, and
how might that help you with the investment
options available to you? Do you have any
employer stock in a stock purchase or stock
option plan? There could be tax-efficient
ways to distribute that stock to you.
9. Retirement Income: Make sure you are
comfortable and understand where your
cash flow will come from each month when
a paycheck will no longer be deposited
automatically. Knowing the tax consequences
of where your cash flow comes from is
incredibly helpful. You will be affected
differently if you pull funds out of your IRA
vs. a Roth IRA or your personal investments.
A tax planning strategy coordinated between
your financial planner and your accountant
will be key.
10. Income Taxes: What is your plan to
pay your income taxes moving forward,
since they will no longer be withheld from
a paycheck? You may need to estimate
taxes, determine what needs to be withheld
from pension payments, IRA withdrawals,
and Social Security payments. In the early
years of your retirement, there may be a
possibility for a Roth Conversion between
your retirement date and age 72, when your
Required Minimum Distributions will begin.
11. Charitable Giving: You should work
with your financial planner and your
accountant to determine how your charitable
giving can impact your financial picture in
retirement. Should you consider " bunching "
contributions for tax deductions? Is a donoradvised
fund something to consider?
12. Home Equity Line of Credit: Consider
a home equity line of credit (HELOC) loan
before you retire, if you own a home. Banks
often lend more readily to those with regular
paycheck-based income. Having a HELOC
may enable you to be more flexible with
access to cash during an emergency, or if
markets may be volatile. This access can also
help you balance income to minimize tax
consequences or help you manage Medicare
premium costs.
13. Professional Management: Decide
if you feel comfortable managing your
retirement plans and investment funds
yourself or if you would like professional
help. Working with a financial planner to
manage your portfolio can help you ensure
your retirement needs are met and improve
your overall risk to match your goals. You
will be able to answer questions such as -
will your tax rate change? When should you
begin pension or Social Security income?
What risk level and investment options are
the best for your specific plans and goals?
How will charitable giving and tax planning
affect your retirement?
As you, your friends, or a loved one
approaches retirement, you can use this list to
review and plan for entering retirement feeling
confident and comfortable. Each item needs
evaluation and a thoughtful approach.
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Berks County Medical Society Medical Record Fall 2021

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