Legal-Ease: What to consider when considering retirement

When we retire, it usually means we are ending our long-term, full-time employment. We may return to work for a while or continue to work fewer hours, but our major “make a living and create a nest egg” time generally starts to end upon retirement.

In counseling clients anticipating retirement, I am asked to help clients prepare for all of the changes and opportunities that their senior age and changed circumstances may present. Typically, we focus on four major considerations.

A first consideration is taxes. If a retiree collects Social Security, that person no longer has much reason to pay anything more than the minimum into Social Security. If the retiree is a farmer or business owner, the person may be positioned to restructure the business to decrease the retiree’s self-employment tax, a tax similar to Social Security tax.

Similarly, if a business-owner retiree is losing a great deal of outside income upon retirement, restructuring the business to have the retiree collect more income can potentially make the business more profitable overall because the retiree may be in a lower tax bracket.

Second, related to the first consideration, most retirees will need to decide when to take Social Security or when to begin taking money from an IRA or other retirement plan. And, there are mandatory annual minimum amounts that must be taken from certain retirement accounts beginning at age 70 1/2. However, regardless of when the payments are taken, most payments are taxable, so payment timing can affect the true value of the payments. The factors that we incorporate into this analysis include marital status, other income sources and expected financial needs going forward.

Third, healthcare is always a key focus. Many retirees are unable to continue to secure medical insurance through their former employers or pension plans. Most Americans are eligible for Medicare at age 65, but Medicare is not comprehensive health insurance. The Affordable Care Act attempted to simplify health insurance analysis, but health insurance often remains incredibly intimidating. Therefore, researching retirement healthcare alternatives is crucial before someone retires.

Finally, retirement is a good time to get serious about estate planning and asset protection, particularly in the context of potential long-term care (nursing home, assisted living, etc.) needs in the future. Recent retirees may not have an imminent need for long-term care, but early retirement is usually one of the last times when most people are still insurable for life insurance or long-term care insurance that can cover the expenses related to long term care before a retiree can become eligible for Medicaid.

Likewise, the early years of retirement are usually a key time to at least begin a farm or business’s succession plan, while the retiree still has the physical ability and mental acuity to effectively impart wisdom and experience upon a junior generation.

We attorneys who practice in real estate and estate planning often help to coordinate retirement analysis among a prospective retiree’s investment advisor, accountant, insurance agent and family.

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Lee R. Schroeder R. Schroeder

By Lee R. Schroeder

Guest Columnist

Lee R. Schroeder is an Ohio licensed attorney at Schroeder Law LLC in Putnam County. He limits his practice to business, real estate, estate planning and agriculture issues in northwest Ohio. He can be reached at or at 419-659-2058. This article is not intended to serve as legal advice, and specific advice should be sought from the licensed attorney of your choice based upon the specific facts and circumstances that you face.

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