FA Playbook

Post-retirement strategies will help make your money last

Shelly K. Schwartz, Special to CNBC.com
Troels Graugaard | E+ | Getty Images

For many retirees, the heavy lifting is already done. They've funded their nest eggs, selected health-insurance coverage and determined how much they can safely withdraw from their savings each year without draining their principals.

But autopilot is not an option when it comes to post-retirement financial planning.

The end of each calendar year offers ample opportunity to tweak your financial road map in response to market performance, Medicare changes, new tax laws and life events such as a divorce, deaths or new grandchildren.

Whatever the mission—tax efficiency, maximizing returns or wealth preservation—the following year-end checklist can help ensure the money you saved will continue to work for you.

What to ask your financial advisor when you're in your 50s and beyond
What to ask your financial advisor when you're in your 50s and beyond

Check up on Medicare

This year's Medicare open enrollment started on Oct. 15 runs through Dec. 7. During this period, people with Medicare—the federal government's health-insurance plan for those age 65 and older—can change their health plan or prescription-drug coverage for 2014.

(Read more: Will Medicare will run out in 2026?)

"It's a shorter window than it used to be," said retirement and Social Security expert Mary Beth Franklin, who is also a contributing editor at InvestmentNews, a business newspaper that covers the financial services industry.

"Those who are happy with their Medicare benefits don't have to change anything, but it's advisable for everyone to review what they have, because the plans themselves change year to year," she said.

Health-care costs consume a significant percentage of a retiree's budget, especially in later years. In fact, couples retiring in 2013 will need an estimated $220,000 to cover lifetime medical expenses, according to Fidelity Investments.

Therefore, it's important to use Medicare plans effectively. Franklin said retirees should pay special attention to their out-of-pocket prescription-drug costs. Depending on the types of medication they take, it may be less expensive to purchase Medicare Part D, which provides prescription drugs at a lower cost.

Likewise, financial advisors urge individuals to crunch the numbers to determine whether they would benefit financially by opting for Medicare Advantage (Part C) instead of traditional Medicare plus Parts A and B, or by choosing supplemental coverage through Medigap, which may lower their deductibles and copays.

Appraise a taxing development

Retirees who would normally fall into the low- to middle-income tax brackets may also get an unwelcome surprise this year when they find they are potentially subject to a 3.8 percent Medicare surtax reserved for higher-income earners.

The surtax, new in 2013, applies to net investment income for married taxpayers with modified adjusted gross income (MAGI) above $250,000, and single filers with MAGI above $200,000.

Retirees who experience a one-time windfall, however, from the sale of their business or highly appreciated primary residence could easily meet the income threshold, said Phil Cook, a certified financial planner with Cook and Associates.

(Read more:Tax-planning checklist)

Proceeds from the sale of a principal residence, up to $500,000 for married filers and $250,000 for single filers, are excluded from capital-gains treatment.

However, any gain beyond that amount is not only taxed as a capital gain but is also subject, either in part or in full, to the additional 3.8 percent surtax if it pushes annual income over the threshold.

"We're trying to identify all of our clients right now who might be impacted," Cook said.

Income collected from pensions, qualified retirement plans, individual retirement accounts or 401(k) plans also contribute to an investor's annual net income.

These collectively can push someone over the surtax threshold, as well— particularly for those who withdraw a large sum to, for example, take their extended family on vacation or purchase a condo in Miami to escape winter weather.

A number of strategies, such as recharacterizing income and gifting appreciated assets, can help reduce taxable investment income for 2013, but most require financial expertise and all must be implemented by Dec. 31.

Learn the ABCs of RMDs

Additionally, retirees need to pay attention to required minimum distributions. RMDs generally are minimum amounts that a retirement-plan account owner must withdraw annually starting with the year that he or she reaches 70½ years of age or, if later, the year in which he or she retires.

Those with sufficient savings outside their IRA who don't need the money from their RMDs to cover living expenses might instead consider asking their IRA custodian to perform an in-kind transfer, Cook explained.

Under that strategy, a quantity of securities (stocks, bonds or mutual funds) equal to the RMD amount are moved to a nonqualified (taxable) account to satisfy the IRS distribution requirement.

Retirees will still owe tax on such distributions, he said, but they won't incur the transaction fee and will not have to sell the stock or adjust their portfolio holdings.

(Read more: Tax-planning "to do" list)

"If it was a good investment inside [the client's] IRA, it's still a good one outside of that account," Cook said. "The IRS doesn't care if you distribute cash or property as long as you report the value of that asset and pay taxes."

Beneficiary reviews, basic maintenance

Year-end financial planning is also a good time to ensure that the beneficiaries of an estate plan or trust are up to date, financial advisors say.

That's especially true if someone's circumstances have changed, such as remarriage or divorce, or if the family experienced a death or a birth.

It's also a good time to double-check IRA beneficiary forms, which trump a will. If there's a discrepancy between the beneficiary of an IRA and the person named in your will, the IRA will go to the person named on the beneficiary form—even if it's an estranged ex-spouse.

Indeed, assets with a designated beneficiary—such as life insurance, annuities, IRA accounts and employer plans—are not controlled by the will, said Brad Borncamp, a Lafayette, Colo.-based certified financial planner and public accountant.

"This is extremely important, since the will may end up controlling very little of a person's total estate," he said. "Many people do wills and trusts and then forget to check the title of their assets and the related beneficiary designations, which can make these documents ineffective."

The prudent retiree will also carve out time, as the calendar year comes to a close, to perform basic maintenance.

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Financial advisors stress that investors should analyze their asset allocation to ensure it still reflects their time horizon, tolerance for risk and need for growth.

To that point, investors should ask themselves: Is my withdrawal rate still sufficient to meet my income needs but preserve principal?

Additionally, it makes sense to review tax efficiencies. To offset capital gains for 2013, for example, you must harvest losses (meaning, sell losing shares) by Dec. 31.

Putting Social Security on ice

While there's no specific year-end urgency, investors may also find it helpful to revisit the age at which they plan to begin claiming Social Security benefits.

Conventional wisdom dictates that it's best to delay benefits beyond your full retirement age to inflate the size of future benefits. This is feasible up to age 70, when the benefit of delaying any further disappears.

However, there are cases in which it may make more sense to start collecting Social Security benefits sooner. Examples include retirees who need the smaller benefit earlier to make ends meet and those whose life expectancy may be compromised.

(Read more: Tips to maximize Social Security benefits)

Likewise, dual-income married couples may find it beneficial after retirement for the spouse who earned less to begin claiming half the higher-earner's spousal benefit earlier, while the latter continues to delay his or her own benefit, Franklin said.

—By Shelly K. Schwartz, Special to CNBC.com.