How to develop your strategy for retirement Even if you are several years away from retirement, it’s not too early to start gathering facts, exploring options, and mapping out your tax and investment strategies. The following are several suggestions that will help you organize your retirement planning and start thinking about your exit strategy from the workforce. 1. Understand the Social Security and Medicare benefits of retirement. You can receive a reduced Social Security benefit any time after reaching age 62. The full benefit estimate shown on your Social Security statement will be yours when you reach “full retirement age” (FRA), which is gradually rising. The age applicable to you is based on your birth year and is shown on your statement. You'll need to apply for Social Security at your local Social Security office or online at www.ssa.gov a few months prior to your intended retirement date.Many individuals face the decision of determining the right time to take advantage of the benefits during the 62 to 70 age range. Should you begin receiving benefits early at a reduced amount for possibly more years, or delay receiving benefits at a larger amount for possibly fewer years? The answer to this question largely depends on one's current health, family longevity, and need for income. Married couples should coordinate their benefit decisions in order to maximize their family's lifetime benefit.You may begin receiving Medicare benefits, which should cover a substantial part of your health care costs, at age 65. You may sign up for Medicare three months prior to attaining age 65. Information on coverage and the application process is available at www.medicare.gov.2. Find out about company health benefits. Although Medicare is fairly comprehensive, there are gaps that you may need to fill. Some companies recognize this fact and offer employees supplemental health insurance plans or group rates.3. Explore your retirement benefits. You'll want to know whether you will be receiving regular, fixed payments or whether you will have the option to take your benefits in a lump sum. If you choose a lump sum, you'll have to make another decision: to keep the money and pay tax on it immediately or set up a Rollover IRA. There are limited tax breaks available for your payout. Thus, you may be taxed at your ordinary income tax rate. If you set up the Rollover IRA, you can continue to shelter income earned in the account until you are required to begin making withdrawals at age 701/2.4. Develop an investment strategy. Conventional wisdom for retirees stresses the need to play it safe. The usual recommended approach is to reduce risk and enhance income. But few investments are risk-free. Rising living costs may even make fixed-income investments look, in hindsight, like a risky investment. Your investment decisions should be made specific to your personal financial picture and tax outlook.5. Determine who will oversee your investments. Your own background and temperament will determine the best way to manage your investments. With leisure time, you may enjoy monitoring your portfolio. On the other hand, you may want to travel or pursue new interests, and you'll want to put your portfolio in the hands of a professional investment manager. Perhaps you want to do it yourself, but would like a “second opinion.” A Central Trust Officer can explain the many options available.6. Plan for the unexpected. Many people are concerned about more than the management of their portfolio after retirement. They have questions such as: What happens to my finances in the event of my disability, prolonged illness, or incapacitation? How can I provide for continuing income and support for loved ones after my death? One possible answer is a living trust-a comprehensive, long-term investment plan that can help resolve these concerns. Consult a Central Trust Officer to learn more about available estate planning tools and techniques.7. Look for ways to augment your retirement capital. Usually the last years before retirement are years of peak earning power. Contribute as much as you can to tax-deferred retirement plans, such as an IRA or a company 401(k) plan.8. Stage a “dress rehearsal” for retirement. Estimate your monthly income and monthly expenses. If you believe that your expenses will be less, take that into account. Then try living for a month, now, on what you plan to live on later.Of course, financial planning is not the only planning you need to do. You may want to look for a new place to live, make extensive travel plans, or take up the hobby that you've never had time for before. Whatever your anticipated retirement pleasures, you'll enjoy them all the more when you know your financial future is secure.Contributed by John Bailey, CFP®, Vice President & Wealth Strategist, Central Trust Company Columbia, MOProducts and services offered by Central Trust Company are not insured by the FDIC, are not deposits of or guaranteed by any depository institution or affiliate bank and are subject to investment risks, including possible loss of the principal amount invested. Insurance products are available through and underwritten by non-affiliated insurance companies. The information provided in these articles is intended for informational purposes only. It is not to be construed as the opinion of Central Bancompany, Inc., and/or its affiliates and does not imply endorsement or support of any of the mentioned information, products, services, or providers. All information presented is without any representation, guaranty, or warranty regarding the accuracy, relevance, or completeness of the information.