Nov. 18, 2019
I was talking to a thirty-something acquaintance and, just to make conversation, I asked how her father-in-law was transitioning into retirement. “ He’s such a Luddite, I’m not encouraged .” Luddite by definition is a person opposed to new technology. Her definitive statement made it clear that in her mind if a retiree can’t handle modern technology, it’s not going to be a happy experience. While her conclusion may overstate the probable outcome, I have to agree that a prospective retiree stands to do better by leveraging technology than by ignoring it. And since the process of planning for retirement is both disruptive and soul-searching, it offers a unique opportunity to get one’s digital house in order.
Few of us look forward to dealing with tech issues in our own lives. But since retirement planning requires effort, and the effort is aimed towards a desired goal, why not add digital planning to the mix? Below is a checklist of digital planning considerations a prospective retiree should include in the retirement planning process.
Life will be disrupted with retirement anyway, so it’s a good time to make changes to one’s digital plan. If the skills and efforts needed to make these changes are overwhelming to the Luddite-oriented retiree, it’s also a good time to get help planning the changes, making the changes and learning how to manage digitally going forward. We’ll call this process the Retirement Digital Plan (“RDP”).
Setting the stage
Some items in the RDP are essential to utilizing digital resources in retirement. To leverage the other opportunities we’ll discuss, the retiree must first take care of these basics.
- Equipment – At retirement, retirees often lose access to an employer-provided computer and printer, cell phone, scanner, and other digital tools. The RDP should address what equipment the retiree will have and where it will be located. The plan could involve improving wi-fi speed, leveraging a smart TV or other solutions. The key is functionality and accessibility for the retiree.
- Support – Another lost benefit for many retirees is access to the employer’s helpdesk. An early consideration in planning is how to assure digital support during retirement. Whether it’s hiring the Geek Squad, getting a commitment from the retiree’s child or involving a neighbor, it’s important to the RDP that an ongoing computer support network exists for the retiree. If the individual did not retire with a strong knowledge of digital issues or is at risk of cognitive decline, a digital support plan is necessary in planning.
- Security and storage – Digital back up may have been a given at work, but it’s not in retirement. Some early considerations include how to assure the security of digital assets and how to back up the files. There is no lack of internet safety tools, and the cloud offers virtually unlimited storage capabilities. However, this should be built into the plan; it can’t be an after-thought. An important aspect of this planning is managing passwords. A haphazard approach to passwords may have worked before retiring, but when the bulk of one’s income is coming from government and financial institutions, passwords take on added importance. The plan should be designed with the issue of elder abuse in mind. The elderly can be vulnerable; digital solutions should protect, not expose, the retiree.
- Personal fit – The RDP has to fit the person involved. While the specific items below can enhance one’s retirement, it should not be set up to overwhelm. The goal is ease and efficiency, not stress and frustration.
Government Benefits and Taxes
For many, grappling with government benefits and taxes is the most important and yet vexing aspect of retirement planning. Using the many digital tools available can make this process significantly easier.
- Social Security – The SSA.gov website is an excellent tool for setting up benefits, and most planners would argue it is superior to a visit to a Social Security office or discussion with a service representative by phone. Once the retirement benefit has been applied for, it is essential that payments be electronically deposited in the retiree’s bank account. Paper checks are cumbersome and a security nightmare.
- Medicare – This key benefit can be a paperwork hassle because it potentially involves as many as four different programs: Medicare Parts A, B, and D, and a Medigap plan. However, if the retiree is planning to receive Social Security payments at the same time as Medicare, the process is simplified because Medicare premiums can be deducted directly from the monthly Social Security payment. When done digitally with CMS.gov, this process does not have to be intimidating and in fact, can work seamlessly.
- Tax withholding and estimating – Many a new retiree has been burned by missing this step in retirement planning. The scenario is where the retiree had been an employee and consequently had tax payments deducted through payroll withholding. Upon retirement, the individual receives income from part-time work, investment returns, Social Security and other sources, but none of these sources withhold income taxes. This can lead to a tax penalty for under-withholding. The solution can be digitally based. To avoid a penalty, retirees in this situation typically file quarterly estimates. Traditionally this has been a hassle, but now it’s possible to make a direct debit from your checking or savings account via IRS Direct Pay (no cost) or through the use of third-party vendors (usually a small fee).
In retirement, we have an interesting challenge. The retiree wants to enjoy “the good life” but is dependent on government benefits, savings and investments to pay for this lifestyle. It defeats living the life of leisure if managing the financial process becomes the retiree’s new job. The ideal situation is to use digital tools to make the administration of retirement finances both simple and secure.
- Auto-pay and processing – During the early “go-go” years of retirement, retirees want to travel. A multitude of digital aids can make this a reality. Central to this strategy is to have income and expenses handled digitally. By automating the banking process, the need for envelopes and stamps is reduced or eliminated. Even if some snail mail continues, the post office offers USPS Informed Delivery. It’s a free service that sends a scan of your mail every day you receive a delivery.
- Vault your documents – A generation ago, airline e-tickets and on-line brokerage accounts were considered cutting-edge digital solutions. The new wave is towards digital tools that help in the storage of vital documents. Powers of attorneys, wills, and other legal and financial documents can be scanned and stored in electronic vaults. These vault services provide both a back up to paper and a means of easy access. Some states are even experimenting with digital wills. These digital tools not only make finances in retirement easier to manage, but also provide peace of mind concerning the inevitable transition to infirmity or death.
Retirement is intended to be a period of leisure, increased time with the family, and giving back to the community. While it’s tempting to see this as an opportunity to reduce one’s digital footprint, reality dictates the opposite. The functionality added by digital tools has the potential for adding greatly to the enjoyment of retirement.
- Security – When the nine to five grind of a job is gone, security in a retiree’s residence is an increased concern. New tools, including smart cameras and alarm systems, offer safety – whether at home or gone. The retiree can be traveling, but still be aware of the physical well-being of the residence (loss of power, water leak, heat, etc.) and can scare off potential intruders (motion-detecting cameras with remote audio).
- Storage and recall – There are more documents important to the retiree than just legal and financial papers. Scanning photos and memorabilia, with easy tools for retrieving them remotely, offer the retiree flexibility in sharing important family memories. Genealogical tools that create and store family trees digitally help preserve family legacies that otherwise might be destroyed.
- Leisure time – Whether a Kindle or iPad for viewing, Audible or Great Courses for listening, Facebook or Portal for communicating, a myriad of leisure-time tools can boost the retiree’s ability to enjoy free time and stay in touch. The RDP can help the process by coordinating the communication tools shared by the retiree and other family members.
- The internet of everything – It is not easy to create a checklist of digital tools for the RDP because there are so many possibilities. Take health issues for example. Digital solutions include taking an EKG by using an Apple Watch, monitoring CPAP usage through a smartphone, or having hearing aids that both improve hearing and serve as a discreet translator in a foreign country. It may be trite to say it, but the possibilities are endless.
The Retirement Digital Plan need not be a formal process. However, it should include working through a checklist of retirement planning needs that can be supplemented, simplified, or otherwise improved by leveraging digital solutions. Luddites can lament their defiance, or they can learn to embrace technology in retirement.