10 Essential Documents for Retirement

When planning for retirement, most people focus on saving, and rightly so. Having enough money to fund your retirement dreams is a key element to any plan. Often overlooked, however, is the importance of obtaining and organizing important documents. The following are 10 essential documents you will need to successfully navigate retirement.   

Pension Paperwork

Defined benefit pensions have become less common over the years, but there are still many people covered by them. If you have a pension at work, the details of the plan will be spelled out in the plan’s Summary Plan Description. In addition, you should receive an Individual Benefit Statement that details the specific benefits that you have earned and are eligible for. Make sure to review those documents as you approach retirement so that both you and your spouse have a good understanding of how much income you can expect from the plan and what will happen to that income if the primary pension holder dies. Make sure to contact your employee benefit’s department with questions or concerns. Also, the Department of Health and Human Services offers help and advice to pension holders through its Pension Counseling and Information Program. Visit www.aoa.gov for more information.

Beneficiary Designation Forms

Many accounts, such as Individual Retirement Accounts (IRAs), 401(k)s, annuities, and insurance policies allow you to name a beneficiary who will receive those assets when you die. Many people don’t realize that those designations take precedence over their will, even if the will is more accurate and up to date. Because of this, it is important to review the beneficiary designations on all your accounts (as well as those of your aging parents if you are helping them with their finances) prior to retiring to make sure that they accurately reflect your wishes. Meet with your financial adviser and estate planning attorney to ensure that your designations not only pass property to the correct people, but also minimize expense and taxes.

Documents Needed When Applying for Social Security

The Social Security Administration will need you to provide certain documents when filing for retirement or survivor benefits. Documents they may request include your Social Security card, a certified copy of your birth certificate, proof of citizenship if you were not born in the U.S., military discharge papers, a copy of your marriage license or divorce papers, and a copy of your W-2 form (or self-employment tax return) for last year. Having these documents readily available will help speed the process along.

Investment Paperwork

Most people’s assets are divided into many different types of accounts. Some may be tax-deferred, others may not. Some might have restrictions or requirements on withdrawals. Some, like annuities, might give you different options for turning the account into a guaranteed income stream. When transitioning into retirement, it is important to have current copies of your account statements as well as options or restrictions associated with each account so you can craft a distribution strategy that meets your needs while minimizing expense, hassle and taxes.  

Health Care Paperwork

Your health benefits during retirement will likely come from multiple sources. Those could include a former employer, Medicare, Medicaid, a Medicare supplement policy, or a long-term care policy. Be sure to retain benefit summaries, contact information, and policies associated with each. If you have not filed for Social Security benefits by age 65, you will need to apply for Medicare. You can do this up to three months prior to your 65th birthday. When applying, you will likely need to provide them with the same documents mentioned earlier for Social Security applicants.

Home Inventory

Many house fires or burglaries occur when the homeowner is away. When you retire, you will likely spend more time traveling or at a second home than you did during your working years. Because of this, it is important to inventory the contents of your home so that you can more easily make insurance claims and rebuild your life if the unexpected happens.

Insurance Policies

Many retirees have life insurance policies in order to replace income in the event of a death, as a vehicle to build cash value, or for estate planning purposes. Make sure to have current copies of your policies as well as contact information for the insurance company so you can easily access cash value during life or so that your heirs can easily claim benefits if something happens to you.

Will/Trust

Most people need a will, regardless of the size of their estate, to control the passing of property at death. Another tool to accomplish this while at the same time avoiding probate is a Revocable Living Trust. As you enter retirement, you should meet with your attorney to put a plan in place that passes your property to the correct people, designates the correct people to take charge, and minimizes expense, hassle and taxes.

Durable Power of Attorney for Finance and Health Care

A durable power of attorney for finance is a simple and inexpensive legal document that authorizes a person you have chosen to step in and manage your day-to-day financial decisions if you become incapacitated. Everyone needs this document to provide for the ongoing management of their financial affairs if they cannot make decisions for themselves.  

Similar to the power of attorney for finance, the health care power of attorney is a legal document that authorizes a person you have chosen to step in and make health care decisions for you if you become incapacitated and can no longer speak for yourself. You can also include a health care directive which provides written instructions to your agent that communicates your wishes regarding the withholding or withdrawal of certain life support equipment or medical procedures.

If you plan on moving to a different state when you retire, meet with your attorney to make sure that your will, trust, and powers of attorney will be valid in your new state of residence and make any necessary revisions.

Tax Returns

In many ways life becomes easier after you retire. Unfortunately, this is not the case with your taxes. In fact, because your employer is no longer automatically withholding from your paycheck, tracking and paying your taxes may become more complicated. To make matters worse, different states tax income and spending differently. Will you owe tax on Social Security? How about pension and annuity income? How much should you withhold from IRA distributions? The short answer is “It depends.” 

Because of this you should work closely with a trusted tax adviser and then maintain your tax returns and supporting documents for seven years. The IRS can look back three years for basic errors and six if you underestimated income by more than 25 percent. 

As you can see, obtaining, understanding, and organizing your key documents will not only help you to make informed decisions, but will also facilitate a smooth transition into a rewarding and meaningful retirement.

FPA member Joseph R. Hearn is the Vice President at Teckmeyer Financial and author of the books If Something Happens to Me and The Bell Lap: The 8 Biggest Mistakes to Avoid as You Approach Retirement.