Critical retirement choices

It’s crucial to make your wishes known about what you want to happen with your healthcare and your property.

The idea of retiring isn’t new. People who grew too old or too ill stopped working and stayed home long before pensions and Social Security. But as people live longer, the retirement experience takes on a different meaning. Not only can you expect more years of retirement than of adolescence, but those years can be a lot more satisfying and rewarding.

55: You can begin withdrawing from 401(k)s, 403(b)s, and certain other plans without a 10% penalty if you retire, quit, or are fired.

55: You may be eligible for full pension benefits from some employer plans if you have enough years of service.

59 1/2: You can begin withdrawing from a number of tax-deferred savings plans (such as IRAs and deferred annuities) without paying a 10% penalty, even if you are still working.

62: You may be eligible for full pension benefits from your employer.

62: You can receive reduced Social Security benefits.

65: You can receive full pension benefits from most employers.

65: You qualify for Medicare benefits.

67: You are eligible for full Social Security benefits if you were born in 1960 or later.

70: You should start collecting Social Security if you haven’t yet begun, since the maximum base you qualify for will not increase above the amount you’ll receive now.

73: You must begin withdrawals from your traditional IRAs and from most qualified retirement plans unless you’re still working and own less than 5% of the company.

Some critical choices

As morbid as it sounds, even as you’re looking forward to retirement, you need to deal with two critical issues: the medical decisions you want made if you’re ill, and what you want to happen to your property after you die. If you don’t make your intentions clear, your family and friends face a greater emotional burden and often greater expense than they might otherwise. And you might not approve of the decisions that are made without your direction.

It’s not enough just to tell people what you want to happen. State laws usually require written proof of your wishes concerning life-prolonging treatment if you’re critically ill, just as they require a legal will to transfer your property.

A living will, also called an advance directive, is a document that describes the kind of medical treatment you want — and don’t want — if you are terminally ill or you are unable to communicate, and are unlikely to be able to do so in the future. In writing your living will, you should be as specific as possible about the kinds of drugs and medical procedures you have in mind and the situations under which they should — or should not — be used.

Though all states accept living wills, the laws of each state are a little different, so you want to be sure that the living will you sign meets local requirements. One area that remains unresolved, for example, is whether a hospital will respect your wish not to receive food and water. Some states require that feeding be continued as long as you are alive. Others allow it to be ended if that’s what you’ve indicated in your living will.

Since professional caregivers generally choose to prolong life when possible, you probably don’t need a living will if you agree with that approach. But if you’re opposed to extraordinary measures to keep you alive, such as heart-lung machines, intravenous feeding, and similar techniques, you should sign a living will and ask two people to witness it. You should also be sure your family and your doctor know that you’ve signed a living will and where they can find a copy.

You don’t need a lawyer to draw up the document, although if you’re in the process of preparing a regular will, you can sign both kinds at once, probably for little or no additional charge. Otherwise, you can get a standard form to fill in, or a model to copy.

A living will makes your healthcare wishes known, but it does not always guarantee they will be followed. Someone will still have to authorize treatment or make a decision not to continue it. You can appoint a healthcare agent or surrogate, sometimes called a proxy, in a signed and witnessed document known as a healthcare proxy. Or you can grant a durable power of attorney for healthcare to someone who will make the decisions you would have wanted.

You should be sure to ask permission of the person you name and describe your feelings about your care in detail. Without understanding what you want, it would be very difficult for your surrogate to see that your wishes are carried out. Because there are still unresolved legal questions about the extent of a surrogate’s authority, it probably makes sense to get legal advice in preparing these documents.

The right time

When’s the right time to sign a living will and healthcare proxy? If you have strong feelings about the way you want to be cared for if you’re ill or injured, you can do it as soon as you reach the age of majority in the state where you live, usually either 18 or 21. It’s easy to think of healthcare as a problem for the elderly, but the truth is most of the major court cases involving a patient’s right to refuse a particular type of treatment or the right to die have dealt with young people — often in their late teens or early 20s — who were injured in an accident or became ill unexpectedly.

Drafting a will

If you want your wishes about the transfer of your property and the care of your dependent children carried out after you die, you must execute, or sign, an official will and have it witnessed. Young people without dependents or property may be able to postpone making a will. But anyone else is making a serious mistake by putting it off.

This information is provided with the understanding that the authors and publishers are not engaged in rendering financial, accounting or legal advice, and they assume no legal responsibility for the completeness or accuracy of the contents. Some charts and graphs have been edited for illustrative purposes. The text is based on information available at time of publication. Readers should consult a financial professional about their own situation before acting on any information.