3. Move to a No Tax State. Move to a state with no income tax on pension, Social Security or dividend income. Florida, Nevada, New Hampshire, Pennsylvania, Washington and Wyoming are among the states that don’t tax that income.
4. Accept Government-Sponsored Medical Insurance. Medicare provides adequate health insurance coverage for doctor’s visits, emergency care, assisted living, etc., but doesn’t cover prescription drugs, dental or vision care. For this, you will need add-on coverage like those offered by Medicare Advantage and Supplemental Insurance, known as Medigap. Consult with your insurance provider prior to retirement to ensure you can afford proper health insurance coverage. If you can’t, inquire about government subsidies or senior plans offered by the likes of AARP.
5. Max-Out Retirement Accounts. By now you should be fully funding all of your retirement accounts and making any catch-up contributions. The 2015 catch-up contributions for IRAs total an additional $1,000 ($6,500) and $6,000 ($24,000) for your 401(k). As they are the most tax advantageous, make sure you are fully funding these accounts over the next few years preceding your retirement.
6. Diversify Using Bonds and ETFs. As you are nearing retirement age, you will want to gradually rebalance your portfolio so that it has less of volatile investments such as stocks, and more of safer investments such as bonds and exchange-traded funds, or ETFs.
7. Join AARP. The benefits of joining AARP are endless. For those unfamiliar, AARP is the popular senior citizens advocacy group. The annual membership fee is only $16 and is discounted even further when years are bought in bulk. Members receive invaluable discounts on dining, travel, roadside assistance, auto insurance, health benefits and more. This is a program that’s definitely well worth signing up for.