Retirement Planning in Your 50s and 60s

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Educators in their 50s and early 60s probably feel a lot like high school seniors in March – the goal is almost in reach! In fact, the average age of a CalPERS retiree is 60; for CalSTRS, it's 61.3. But if retirement is looming, how prepared are you financially? Use this checklist to help you graduate to your next step in life.

  • Investigate your retirement accounts. Start with your CalSTRS or CalPERS retirement benefits. You’ll find links to benefits counseling, workshops, benefits calculators and more at www.calstrs.com and www.calpers.ca.gov. You may also have pensions and retirement accounts from past employers. Round up information about all of them.
  • Search for lost pensions at the Pension Benefit Guaranty Corporation.
  • Ask about retiree medical benefits.Find out if you will receive medical insurance in retirement through your employer. Also explore retiree medical benefits through a spouse (and if so, eligibility requirements).
  • Gather Social Security benefit information. If you have Social Security earnings from a past job with a non-public school employer or through a spouse, now is the time to determine how your benefit will affect your retirement income. Learn more about Social Security eligibility as a CalPERS or CalSTRS participant.
  • Calculate how much you need to retire comfortably. Most educators find they need to replace 90% to 100% of their pre-retirement income to maintain a comfortable lifestyle in retirement – even more if retiree medical insurance is not available through your district.
  • Make catch-up contributions. If you're 50 years or older, you can make catch-up contributions to your 403(b) or 457 plan. You may also be eligible to make additional contributions under the 15-year rule or the final 3-year provision.
  • Consider an IRA. If you've maxed out contributions to your 403(b) or 457 plan, think about opening and contributing to an individual retirement account (IRA).
  • Attend CalSTRS workshops.  Workshops include details about how your benefit is calculated. In addition, the CalSTRS Retirement Management workshop can help you manage your retirement spending plan.
  • Determine how much you’ve accumulated toward your nest egg and how much more you need to save to reach your goal. Then decide how you want to take your proceeds – as a lump sum, systematic payments or monthly annuity. Consider hiring an actuary, financial planner or CPA to help you decide which option gives you the best outcome.
  • Develop a budget. Review your anticipated expenses once you retire. Include new activities and potentially higher health care costs. Next list your income sources: Social Security, pensions, retirement accounts and other assets.* Then work out a monthly budget. Also, decide if you are prepared to manage your money. If not, consider hiring a professional, qualified financial planner and stay informed about your investments and expenses.
  • Apply for Social Security if you paid Social Security taxes at any time during your career. If you are eligible for Social Security, submit your application three months before you expect payments to begin. To learn more about enrollment and your eligibility, visit www.socialsecurity.gov and use the site’s “Benefit Eligibility Screening Tool.”
  • Plan your health-care coverage. Find out if your employer will continue to cover you and your spouse under the district's insurance plan and what is included in that policy. Also explore retiree medical benefits through a spouse (and if so, eligibility requirements). Learn about your Medicare options, their costs and when you can apply. Even if you’re ineligible for full Social Security benefits at age 65, you probably qualify for Medicare. The Medicare Web site has several helpful pages explaining Part A, Part B, Part D prescription drug coverage and Medicare + Choice coverage and costs. Contact your district and local Social Security office to learn if you qualify while still working. There is a penalty for late enrollment, so be sure to apply for Medicare about three months prior to your 65th birthday at your local Social Security office or call 1-800-772-1213.

In 2013, the standard monthly premium for Medicare Part B is $104.90. Depending on your Medicare choice, you may want to supplement your coverage with a Medigap policy. Consider how various plans fit into your retirement budget and the coverage you need. The Medigap open enrollment period lasts six months, starting on the first day of the month that both these requirements are fulfilled: you are 65 years old and enrolled in Medicare Part B.

  • Continue managing your portfolio. Rebalancing your portfolio can help ensure that your portfolio matches your timeline, goals and risk tolerance. Rebalancing (adjusting the percentage of your portfolio in stocks, bonds or other investments) is even more important as you near retirement. As you near retirement, you may need to move a larger percentage of your 403(b) or 457 assets from more aggressive investments (stocks) into more conservative investments (bonds and cash equivalents). In addition, you need to be realistic. If your portfolio has suffered losses, you may need to delay your retirement or accept a lower standard of living in retirement.
  • Update your estate plan. Due to changes in your personal and financial situation, you may need to adjust your estate plan. Make sure that primary and contingent beneficiaries on retirement plans, brokerage accounts, life insurance and other assets not controlled by your will are up-to-date. An estate planning professional can help you ensure that your plan meets your goals.
  • Learn more about life and disability insurance. Looking ahead, life insurance needs may be reduced in retirement, but you may benefit by locking in lower rates while you're in good health. Learn more about insurance products available through CTA.
  • Consider long-term care insurance. Buying a policy now may help preserve your nest egg later. You can choose coverage for assisted living, home health care and nursing home costs that you may otherwise pay out of pocket.

* CalSTRS participants will not receive Social Security benefits based on their CalSTRS employment, but may be eligible based on other employment or a spouse's income.