Take steps before your retirement party to get all the perks coming to you.

Preparing for retirement means saying goodbye not only to your co-workers and a steady paycheck, but also to employer-provided benefits such as health insurance and a 401(k) match. Before you head out the door, it pays to squeeze a few extra bennies from your boss.

Time it right. Companies use various timetables to match employee 401(k) contributions and dole out profit-sharing. Don’t leave before the last check has been written. Your summary plan description, provided by your employer once a year, will clue you in to the key dates. Also find out the rules for cashing out paid leave. If your unused leave expires at the end of the year, you might decide to retire before the holidays rather than in January.

Line up insurance. Fewer than 10% of private employers offer retiree health coverage, which coordinates with Medicare after you turn 65. If yours offers this insurance, grab it, advises Helen Darling, president of the National Business Group on Health. There’s less cost-sharing than with Medicare, she says. If you retire before age 65 and can extend your regular employer health coverage through COBRA (you’ll pay the full premium), it might be your best bet. But you may be able to find cheaper individual coverage on your own if you’re in good health (go to eHealthInsurance.com for quotes) or, in 2014, through one of the new state health exchanges.

You may have purchased group-sponsored voluntary life insurance in addition to the life insurance provided to you by your employer at no cost. A few employers let you take the additional insurance with you, generally for reduced coverage or at a much higher price than you paid while you were employed, says Bob Patience, of Prudential Financial. The voluntary coverage is probably worth taking only if you still have a mortgage or kids in college and can’t get cheaper coverage on your own because of your health.

Long-term-care insurance purchased through your employer is completely portable. The price usually remains the same, but you’ll have to arrange to pay the premium yourself.

Apply for your pension. Five months before you retire, ask your human resources office for an application and a statement that shows your benefit calculation and payout options. Your employer may give you a choice between a lump-sum payout and an annuity. With the annuity, you get lifetime income. With the lump sum, you can invest the money as you choose, but you also have the challenge of making it last as long as you do.

If you’re married, you must get your spouse’s consent to take either a lump sum or an annuity covering your life only; by law, the default is a joint annuity with a lower payout that gives your spouse survivorship rights to at least 50% of the monthly benefit.

If you choose the lump sum, be sure to have the plan transfer your money directly to an IRA. If you take the money, even with the intention of rolling it into an IRA within 60 days, your employer must withhold 20% of the amount for the IRS.

Position your retirement stash. To preserve the pretax status of your savings, you can generally leave the money in your 401(k) or roll it into an IRA. Each choice has its advantages. The IRA gives you more investment freedom, but “the investment options inside your employer 401(k) are often cheaper than what you could buy on your own,” says Marina Edwards, a senior retirement consultant with Towers Watson, a benefits-consulting firm. While you’re deciding where to put your savings, track down 401(k)s from previous employers. Consolidating them into a single IRA could reduce expenses and make it easier to manage your investments.

Source: kiplinger.com ~ By JANE BENNETT CLARK

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