The current crisis and your retirement, Part 2

Yesterday I offered what I hope were some useful suggestions for readers who have already retired. Much of that advice will apply to pre-retirees, as well. Here’s some additional advice, aimed at people whose retirement is imminent. Part 3, tomorrow, will address those whose retirement is further off.

If you’re planning to retire soon (like in a year or two)

1. Consider the feasibility of delaying. This won’t be an option for everyone, but for those who can swing it, it has some decided advantages. First, you’ll have more time to contribute to your retirement plans. Your future defined benefit pension checks (if you’re lucky enough to have a traditional pension) should grow too, because plans typically use a formula that includes years of service; if you don’t know how your pension will be calculated, now’s a good time to find out. Your Social Security benefits will also grow if you defer taking them, up to age 70. Finally, the more years you work, the shorter the period of time your savings should have to support you as a retiree. Unconvinced? Here are more reasons to consider delaying if you possibly can.

2. If you can’t put it off completely, see if you can put it off partially. Ask your employer about a “phased retirement,” where you work, say, three days a week instead of five. This could be to your employer’s advantage as well as to your own.

3. Don’t forget to sign up for Medicare at age 65, regardless of when you plan to retire. The Social Security Administration recommends applying three months before your birthday. A good source of information is the Medicare Rights Center.

4. Rethink your retirement budget. If you can’t or don’t want to delay retirement, take a close look at your anticipated expenses. Could you cut back a bit until your investments recover? Could you put off some big costs (travel, new car, etc.) for a year or two? Some good news here is that the old rule of thumb that people need at least 80 percent of their pre-retirement income each year to support themselves in retirement may be on the high side, according to recent research. Everybody’s situation is different, of course, and some people may need 100 percent or more. But if you’ve been assuming 80 percent as a ballpark figure, it may be worth your while to try to itemize your likely expenses. Retirement could be more in reach than you realize.

5. Nail down your benefits. Make sure your employer-sponsored retiree benefits (especially any health coverage) are still what you’ve been anticipating. Employers have recently been cutting back in that area, and the current chaos may give more of them an excuse to do so. —Greg Daugherty

Greg writes the “Retirement Guy” column each month in the Consumer Reports Money Adviser newsletter.