Are you ready to retire, but you’re not sure how to go about it?

You’re not alone.

Planning for retirement can feel overwhelming for both individuals and business owners.

That’s why we’ve put together this list of the most common retirement planning NJ questions (and answers) we receive:

Questions for Individuals:

1. What should I do with my 401(k) from my old and current employers?

If you have a 401k with your current employer and one with an old employer you haven’t touched, you have several options.

You can roll over to a traditional or Roth IRA, combine it with your new plan, or leave the account and take a lump-sum payout.

Your decision can positively or negatively impact your investment terms, associated fees, rules for withdrawal, required minimums, taxation and creditor protection.

These are all important retirement planning NJ considerations to note when speaking with your employer or insurance agent.

2. When should I receive Social Security payments?

While your social security benefits are calculated based on your 35 highest years of earnings, the age you take them will impact your monthly payments.

By claiming full retirement age, or FRA, you will receive the exact benefit you’re entitled to each month. That said, you can still claim your benefits as early as age 62 or as late as age 70.

If you claim before your FRA, you will get the money sooner, but receive reduced benefits over time. If you claim after your FRA, your benefits will increase, but may take longer to get.

Everyone is different, so you must weigh these factors based on your health, lifestyle, family, financial situation, and other important considerations when choosing when you receive your payments.

3. Which pension option should I elect for?

To receive your pension payout, most plans will let you take out a lump sum, or receive monthly increments.

As with the above considerations, there are advantages and disadvantages to both, similar to winning the lottery.

With a monthly plan, you’ll receive a monthly payment until the day you die. There are additional options to spread out the payments across your spouse or family member lifespan.

You will still have to pay taxes on each payment, and if the company goes out of business or is sold, it might become more difficult to receive your promised benefits.

If you go with the lump sum payment option, you’ll receive your entire savings up front. This can be a blessing as you may need the money to pay off bills or debt, but if you don’t spend it wisely, you can soon run out of money.

4. I might lose my health insurance coverage and I’m worried about long-term healthcare costs. Do I need a Medicare supplement?

Medicare likely will not cover 100% of your medical costs, although it will depend on the terms in your companies plan.

Medicare supplement insurance plans add additional layers to help cover what they provide along with your true medical expenses.

There are also “Medigap” policies, which usually will cover expenses like deductibles and co-pays.

It’s important to consider the price and benefits of these additional coverages, and decide if it makes sense for you to purchase one or not.

5. How can I leave a tax-free legacy to my heirs?

Required minimum distributions (RMD) are withdrawals are payments you’re required to take out when you hit age 70 ½.

An option to consider is rather than taking out these RMD payments, you can take your post-tax money and put it into a life insurance policy to benefit your heirs or a charity after you pass.

This is one of the best ways to use your retirement dollars to benefit someone or a cause you are passionate about.

Questions for Businesses:

1. Is my business paying too much for my current plan?

The business insurance plan you choose depends on the size and structure of your business, and how much money you think you can realistically set aside.

Do you recall the last time your company reviewed its current retirement plan?

There might be new benefits and plans available for businesses of all sizes that your employees can take full advantage of.

Or maybe there are components that nobody has taken advantage of. There might be cheaper or more affordable policies you and your employees can enjoy.

We suggest speaking with a retirement planning NJ professional to learn about your options.

2. Is our plan compliant?

The Department of Labor (DOL) and Internal Revenue Service (IRS) periodically perform retirement plan audits.

If you take the proper steps to maintain and understand retirement plan policies and updates, you can minimize risk should they audit your business.

Make sure you have proper documentation on file and have an internal staff member who understands, follows and oversees all components of your retirement plan and is in close contact with your external stakeholders.

3. Do we get consistent and timely reviews from our advisor?

Retirement plans can be very attractive for business owners and employees, but they also come with a great deal of risk and oversight.

A retirement planning NJ advisor should focus on helping corporate clients manage their employer-sponsored retirement plans.

They will help you design your plan and operations, compliance and fiduciary responsibilities and provide overall marketplace insights.

If your advisor is not doing these things for you, it might be time to look elsewhere for a provider.

4. Do we have enough fund options?

There are several retirement fund options, but the more common ones are 401(k) or 403(b) plans along with Traditional or Roth Individual Retirement Accounts (IRA).

401(k) is the most common plan.

Your employees decide how much they want to contribute from each paycheck, and you will put it into the retirement plan for them. You also have the option to match your employee’s own contributions, which will you give additional tax benefits.

403(b) plans are for employees of government and tax-exempt groups, such as schools, hospitals and churches.

An IRA is like a savings account that comes with tax breaks.

With a traditional IRA, your contributions are tax-deductible in the year they are made. With a Roth IRA, withdrawals during retirement are not taxed.

These are great options to help your staff put money away for retirement and have peace of mind.

5. Are our employees getting the most out of our plan?

Make sure your entire company knows about the retirement benefits that are part of your business plan.

Many young workers don’t see the benefits now, so it’s important to educate them early on how it’s a long-term play, and highly beneficial for you both.

It’s also nice to offer to match your employee contributions, which shows your team you are investing in them and their financial futures.

Have a question we didn’t answer? Comment below or contact us today!