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Consumer Reports

Prepare early for your retirement

By Consumer Reports
You can buy a “Retirement Countdown Clock” online for about $30. You program the kitschy timepiece to count down the number of days, minutes and seconds until your desired retirement date.
It’s cute, but to be truly useful it needs an additional feature: an alarm that goes off periodically to signal you that it’s time to take care of pre-retirement business.
Until someone invents a clock that helps you with your actual planning, you can use Consumer Reports Money Adviser’s timetable to keep your retirement plans on track.
Fifteen years before retirement
Develop a financial plan. The earlier you actually start saving for your retirement, the easier it will be to amass the amount you’ll need to fund your desired lifestyle. A financial planner or the right software can help you figure out how much money you’ll probably need.
Get help from your employer. CRMA’s editors advise taking advantage of any perks that your employer offers, like educational seminars or free financial-planning software such as Financial Engines.
Three to five years before retirement
Pay off debt. Retire any high-interest credit-card debt before you retire. You also might want to retire your mortgage, even if your tax-deductible monthly payment doesn’t bust your budget.
Pick the right retirement date.
You don’t want to retire on Nov. 8 if the matching contributions that your employer makes to your 401(k) plan vest on Nov. 9.
Track down pensions. You can hunt down missing pensions. According to Consumer Reports Money Adviser, a good place to start is with “Finding a Lost Pension,” a booklet published by the Pension Action Center and the federal Pension Benefit Guaranty Corp. To read it online, go to and click on “Publications.”
One year before retirement
Set up an income stream. Plan to draw cash from your assets monthly or annually. Keep enough in a money-market account to cover your expenses for the next three to six months.
Use up your benefits. Medicare generally doesn’t cover dental work, eyeglasses or contact lenses.
So if your employer offers dental and vision insurance, Consumer Reports Money Adviser recommends using your benefits before you lose them.
And don’t forget to take all of the vacation and personal days that you’ve accumulated as either time off or cash.
Six months before retirement
Decide how to take your pension.
Typically you can elect to collect it either as a lump sum or an annuity.
But if you happen to entrust your nest egg to the next Bernard Madoff, you could end up with nothing.
Consider your spouse’s needs.
If you opt to collect your pension in an annuity, you need to choose between a single-life and a joint-and-survivor payout.
Three months before retirement
Sign up for Social Security. You can start collecting at age 62, but you’ll get a bigger check if you hold off. Your payout will increase for each month between 62 and 70 that you delay taking benefits. Whatever you do, apply for benefits about four months before the date when you want to start receiving checks. You can apply online or by phone at (800) 772-1213, or make an appointment to apply in person at your local Social Security office.
Enroll in Medicare. If you’re already collecting Social Security benefits, Uncle Sam will get in touch with you a few months before you become eligible for Medicare at age 65. If you’re not yet on Social Security, you can sign up for Medicare by calling the Social Security Administration about three months before your 65th birthday.
Your last day at work
Turn off the alarm on your “Retirement Countdown Clock.” You’re well-prepared to start living the next phase of your life.