August 7, 2024 • 10 mins
We dive into the common challenges faced right after retirement. DRS team member John shares insights about handling the transition period and offers practical advice to avoid pitfalls. Whether you're planning to buy a house, plan to travel, or trying to navigate insurance coverage, this episode provides valuable tips to help ensure a smooth post-retirement experience.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:05):
Welcome back to Fund Your Future with DRS.
And today's episode is for all thosewho are maybe within five years
of retiring or just kind of thinkingabout retirement soon down the road.
And we're really focusingon some of those challenges
that can come up the month or twoafter you retire.
Today we have John,who is a DRS team member who talks a lot
(00:27):
with folks who end up having these issuesright after they retire.
Maybe they want to go on vacationor take out a home loan,
and they didn't quiteget all their paperwork.
There's all these kind of issuesthat come up.
So welcome, John.
Yeah, absolutely. Thanks for having me.
as much as I like being the herothat comes in and saves the day,
it's also nice if we, don't get ourselvesin those situations.
(00:48):
Exactly.
So that's what we're trying to preventhere are some things to think
about when you're making those plansfor right after you retire.
So what'skind of the most common situation you see?
Yeah, I have gotten to work with a lot ofpeople recently that are buying houses.
So exciting.
Love to hear what people are doing afterthey retire.
(01:08):
Sometimes it's big goals,sometimes it's little ones.
But, we've run into a few timesnow where someone's
trying to close on their houseand they're hitting that final stretch
and they think, I'm going to do thisthree days after I retire.
With DRS and we need a littlebit more time than that.
That first month is a lot of usbehind the scenes
(01:28):
working on communicating with employers,getting that final calculation all set up.
And so it's not normallyuntil the end of that month
when you actually get that paycheck,
that we're able to tell a lenderhow much you're going to get paid.
and so I went through the housebuying experience last year,
and it's very “weneed every form three times.
(01:49):
And we're going to askhow much you make every step of the way.”
And so doing thatthe first month can be a challenge.
Right.
So the suggestion is at least
wait until you've been retiredat least one month or two.
Yeah, absolutely.
Before you decide to buya new house. Exactly.
Some of my colleagues are known for saying
we can't verify how much we pay youuntil we've actually paid you.
(02:11):
And since that doesn't happenuntil the end of the month you retire,
it's a good benchmark of saying,okay, I've gotten money from them.
They'll now work with my lender a little.
That's a good example because oftentimespeople don't go through the house
buying process very oftenand you forget how painful
it is or how much documentationand paperwork you have.
(02:32):
And if a person is thinking
about buying a house, downsizing or movingright before they retire,
they might not be able to use theircurrent income to prove what their credit
worthiness is, because they've mentionedthat they're going to retire that
that payment is going to stop.
And, John, as you said,most lenders will not take information
from DRS where we say we're estimatingwhat someone's retirement benefit is.
(02:54):
They want confirmation that we have paidit, that that's going to be it
is going to be a lifetime ongoing amountthat that person is going to receive.
But oftentimes a lender won't relyon just that estimation of benefits.
Even though that estimationis usually pretty close.
It's not enough.
And I remember very similarlywhen I went through the home
buying process, that it felt like
every time they asked for one moredocument, like it was every three days,
(03:17):
it was like, oh,we need one more piece of information.
And I think it's really challengingwhen you're going through this transition
of income streams to be ableto provide up to date information.
So yeah, I think that's a great example.
John, I know one of the other examplesthat we run into is
when peopleare in the process of retiring.
The first thing they want to dois they want to go travel the world.
(03:38):
And they maybe haven't quite finishedall of their retirement paperwork yet.
Do you want to talk a little bitabout what
that experience can look like,and some pain points associated with that?
Yeah, I actually had this
come up about two weeks agoand so very relevant, very recent.
But they left traveling thinkingthey had done everything
and they didn't realize they actually
(03:58):
had to physically sign a form and give itback to us saying, yes, I want my money.
And so they had to scramble.
I forget which country.
But somewhere in South America,
trying to find a notary, whichdepending on your country that you're in,
can be as easy as going to your bankand getting it done.
Very similar to here.
Or it can be findingthe nearest US embassy
(04:19):
and completely adjusting your entire tripin order to accommodate
having this one form filled outand then sent in.
And so again, less headache.
It's not necessarilythat we can't do these things.
I am a big fan on the phone of like,“we can make anything work.”
It's just a matter of how difficultwe want it to be along the way.
And so if you are wantingto leave the country right when you're
(04:42):
also trying to retire, be awarethat if paperwork gets in the way,
it might be a month before you get paid,which is acceptable for some.
Or just really make sure
that you have all the dominoes in a lineso that they can fall correctly
and that we getyou taken care of during that first month.
John,I know one of the other things that people
are nervous about in that monththat they're retiring
(05:04):
or in that transition of retirementis going from their employer,
provided insurance coverage to whatevertheir retiree insurance coverage is.
Could you talk a little bit about some ofthe challenges that people run into
when they're making that transition?
Absolutely.
The first thing I want to actuallyjust shout out the Health Care Authority,
(05:25):
is greatin getting that transition handled.
I regularly have to tell peoplethat's not what I do, but
we will still get you taken care of,it's just a different phone number.
But oftentimes I see where someone says,oh, if I work the first day of the month,
then I get insurance for that entire monthand so I can work and then retire,
and it'll be great.
I'll get paid.It'll be a smooth transition.
(05:47):
But the way the retirementis laid out for Washington state,
you cannot be on the books or workand be retired in the same calendar month.
And so people end upcausing a gap in their income
because they worked on the first,
and they won't get paidnow until the end of the following month.
From DRS.
But their income
(06:07):
from their employer is now cut offbecause they only worked the first.
And so they're going to have a little spanin there.
It's a rough phone callto have to explain that to someone,
but unfortunately it does happensometimes.
So kind of that last retirement date,do you generally suggest to people
that it's at least the fifth of the monthor something?
(06:29):
It's completely up to each personwhen they want to do it.
but yeah,you could do the fifth of the month.
You would get five days of pay that monthand then a full retirement
the month after.
A lot of peoplejust go with the 30th or 31st.
You know, there doesn't have to be a breakbetween when you are done
working and done with your employer andwhen you are officially retired with us.
(06:51):
So it could be the last day of one monthand the first of the following one.
It just has to be two differentcalendar months.
That makes sense.So you'd have your last working day
be whateverthe last week day of the month is.
Yeah. Yeah, absolutely.
Or for our people that work those weekendshifts, it can be the weekend too,
get those too. Yeah.
We've definitely run into situationswhere those people who are working 24 hour
(07:13):
shifts or things like that don't realizethat it carries over into the next month.
and that can be that can definitely bea challenge as, as John was describing,
if you work at all in a month,you're not going be able to retire.
And for some employers, that might be okay
depending on what their pay cycles are.
But as John was describing,
that can be a real challengefor people who work just one day.
(07:37):
And so that last paycheckthey get is really small.
And then and then there's still anothermonth until DRS is going to pay them.
So thinking about the timing ofwhen your employer is paying you
and what size those checksare going to be based on how many days
you work, and then always rememberingthat DRS only pays benefits
on the last day of the monthand so it might cause a gap.
(08:00):
There is a really important
piece of informationto think about when you're thinking
about your overall cashflow into retirement.
That's a big transitionof getting your normal regular check
and then getting your normal retirementcheck or Social Security check,
or all of these different payments.
And thinking about the cash flowof how all of those line up.
Yeah.
The other piece of that that I heardyou hit on there is the idea: of
(08:22):
we care about when you earn the money,not necessarily when you get paid.
So let's say you get paid on the 10thand 25th, like a lot of state agencies
and you work until the 30th,you can still get paid that month.
You retire on the 10th.
You just can't earn any money from themthat month.
I've had that conversationquite a few times of trying to lay
out the wording to get that one,the dominoes lined up.
(08:46):
One of my favorite phrases there.
Yeah.
This is a lot of good informationfor those of our listeners
who are getting ready to retireand just things to be aware
of when you're making those big plansfor the next stage of life.
Yeah.
Plug for my unit as we talk on the phones,one of our favorite questions
(09:06):
to get is, “whatdo you think I should know?” Oftentimes
we have a lot more knowledgeor we're kind of seeing things,
but we don't want to be overwhelming.
We don't want to share too much.
But also, we're ready to help.
That's what we enjoy in the job is beingable to help people in this transition.
So feel free to reach outand we will guide you
through whatever we can seeand predict, we’ll make you aware of.
(09:29):
Yeah, that's a great suggestion that youif you do call DRS
with some retirement questionsyou can ask your retirement specialist:
“What do you think I should know?”Yeah, absolutely.
Perfect.
Jenny, it's probably also a good reminder
for our listenersthat if they have questions for us
that they want us to talk abouton the podcast, that they can email us
at drs.podcasts@drs.wa.gov.
(09:52):
Yeah, perfect. Send us your questions.
And additionally,you can also send a message
to DRS through your online accountwithout having to wait on the phone.
There we go.
All right.
Perfect. Thanks, John.
Thank you John.
Yeah, thanks for having me.
Thanks for listening.
(10:13):
And now we'd love to hear from you.
What topics would you like to hear about?
What questions do you have for us?
Send an email to drs.podcasts@drs.wa.gov.
That's drs.podcasts@drs.wa.gov.
The Department of Retirement Systemsprovides this podcast as a public service,
but it's neither a legal interpretationnor statement of DRS policy.
(10:34):
References to any specific productor entity do not constitute
an endorsement or recommendation.
The views expressed by guests are theirown, and their appearance on the program
does not imply an endorsement of themor any entity they represent.
Views and opinions expressed by DRSemployees are those of the employees,
and do not necessarily reflect the view ofDRS or any of its officials.
Welcome back to Fund Your Future with DRS.
And today's episode is for all thosewho are maybe within five years
of retiring or just kind of thinkingabout retirement soon down the road.
And we're really focusingon some of those challenges
that can come up the month or twoafter you retire.
Today we have John,who is a DRS team member who talks a lot
(00:27):
with folks who end up having these issuesright after they retire.
Maybe they want to go on vacationor take out a home loan,
and they didn't quiteget all their paperwork.
There's all these kind of issuesthat come up.
So welcome, John.
Yeah, absolutely. Thanks for having me.
as much as I like being the herothat comes in and saves the day,
it's also nice if we, don't get ourselvesin those situations.
(00:48):
Exactly.
So that's what we're trying to preventhere are some things to think
about when you're making those plansfor right after you retire.
So what'skind of the most common situation you see?
Yeah, I have gotten to work with a lot ofpeople recently that are buying houses.
So exciting.
Love to hear what people are doing afterthey retire.
(01:08):
Sometimes it's big goals,sometimes it's little ones.
But, we've run into a few timesnow where someone's
trying to close on their houseand they're hitting that final stretch
and they think, I'm going to do thisthree days after I retire.
With DRS and we need a littlebit more time than that.
That first month is a lot of usbehind the scenes
(01:28):
working on communicating with employers,getting that final calculation all set up.
And so it's not normallyuntil the end of that month
when you actually get that paycheck,
that we're able to tell a lenderhow much you're going to get paid.
and so I went through the housebuying experience last year,
and it's very “weneed every form three times.
(01:49):
And we're going to askhow much you make every step of the way.”
And so doing thatthe first month can be a challenge.
Right.
So the suggestion is at least
wait until you've been retiredat least one month or two.
Yeah, absolutely.
Before you decide to buya new house. Exactly.
Some of my colleagues are known for saying
we can't verify how much we pay youuntil we've actually paid you.
(02:11):
And since that doesn't happenuntil the end of the month you retire,
it's a good benchmark of saying,okay, I've gotten money from them.
They'll now work with my lender a little.
That's a good example because oftentimespeople don't go through the house
buying process very oftenand you forget how painful
it is or how much documentationand paperwork you have.
(02:32):
And if a person is thinking
about buying a house, downsizing or movingright before they retire,
they might not be able to use theircurrent income to prove what their credit
worthiness is, because they've mentionedthat they're going to retire that
that payment is going to stop.
And, John, as you said,most lenders will not take information
from DRS where we say we're estimatingwhat someone's retirement benefit is.
(02:54):
They want confirmation that we have paidit, that that's going to be it
is going to be a lifetime ongoing amountthat that person is going to receive.
But oftentimes a lender won't relyon just that estimation of benefits.
Even though that estimationis usually pretty close.
It's not enough.
And I remember very similarlywhen I went through the home
buying process, that it felt like
every time they asked for one moredocument, like it was every three days,
(03:17):
it was like, oh,we need one more piece of information.
And I think it's really challengingwhen you're going through this transition
of income streams to be ableto provide up to date information.
So yeah, I think that's a great example.
John, I know one of the other examplesthat we run into is
when peopleare in the process of retiring.
The first thing they want to dois they want to go travel the world.
(03:38):
And they maybe haven't quite finishedall of their retirement paperwork yet.
Do you want to talk a little bitabout what
that experience can look like,and some pain points associated with that?
Yeah, I actually had this
come up about two weeks agoand so very relevant, very recent.
But they left traveling thinkingthey had done everything
and they didn't realize they actually
(03:58):
had to physically sign a form and give itback to us saying, yes, I want my money.
And so they had to scramble.
I forget which country.
But somewhere in South America,
trying to find a notary, whichdepending on your country that you're in,
can be as easy as going to your bankand getting it done.
Very similar to here.
Or it can be findingthe nearest US embassy
(04:19):
and completely adjusting your entire tripin order to accommodate
having this one form filled outand then sent in.
And so again, less headache.
It's not necessarilythat we can't do these things.
I am a big fan on the phone of like,“we can make anything work.”
It's just a matter of how difficultwe want it to be along the way.
And so if you are wantingto leave the country right when you're
(04:42):
also trying to retire, be awarethat if paperwork gets in the way,
it might be a month before you get paid,which is acceptable for some.
Or just really make sure
that you have all the dominoes in a lineso that they can fall correctly
and that we getyou taken care of during that first month.
John,I know one of the other things that people
are nervous about in that monththat they're retiring
(05:04):
or in that transition of retirementis going from their employer,
provided insurance coverage to whatevertheir retiree insurance coverage is.
Could you talk a little bit about some ofthe challenges that people run into
when they're making that transition?
Absolutely.
The first thing I want to actuallyjust shout out the Health Care Authority,
(05:25):
is greatin getting that transition handled.
I regularly have to tell peoplethat's not what I do, but
we will still get you taken care of,it's just a different phone number.
But oftentimes I see where someone says,oh, if I work the first day of the month,
then I get insurance for that entire monthand so I can work and then retire,
and it'll be great.
I'll get paid.It'll be a smooth transition.
(05:47):
But the way the retirementis laid out for Washington state,
you cannot be on the books or workand be retired in the same calendar month.
And so people end upcausing a gap in their income
because they worked on the first,
and they won't get paidnow until the end of the following month.
From DRS.
But their income
(06:07):
from their employer is now cut offbecause they only worked the first.
And so they're going to have a little spanin there.
It's a rough phone callto have to explain that to someone,
but unfortunately it does happensometimes.
So kind of that last retirement date,do you generally suggest to people
that it's at least the fifth of the monthor something?
(06:29):
It's completely up to each personwhen they want to do it.
but yeah,you could do the fifth of the month.
You would get five days of pay that monthand then a full retirement
the month after.
A lot of peoplejust go with the 30th or 31st.
You know, there doesn't have to be a breakbetween when you are done
working and done with your employer andwhen you are officially retired with us.
(06:51):
So it could be the last day of one monthand the first of the following one.
It just has to be two differentcalendar months.
That makes sense.So you'd have your last working day
be whateverthe last week day of the month is.
Yeah. Yeah, absolutely.
Or for our people that work those weekendshifts, it can be the weekend too,
get those too. Yeah.
We've definitely run into situationswhere those people who are working 24 hour
(07:13):
shifts or things like that don't realizethat it carries over into the next month.
and that can be that can definitely bea challenge as, as John was describing,
if you work at all in a month,you're not going be able to retire.
And for some employers, that might be okay
depending on what their pay cycles are.
But as John was describing,
that can be a real challengefor people who work just one day.
(07:37):
And so that last paycheckthey get is really small.
And then and then there's still anothermonth until DRS is going to pay them.
So thinking about the timing ofwhen your employer is paying you
and what size those checksare going to be based on how many days
you work, and then always rememberingthat DRS only pays benefits
on the last day of the monthand so it might cause a gap.
(08:00):
There is a really important
piece of informationto think about when you're thinking
about your overall cashflow into retirement.
That's a big transitionof getting your normal regular check
and then getting your normal retirementcheck or Social Security check,
or all of these different payments.
And thinking about the cash flowof how all of those line up.
Yeah.
The other piece of that that I heardyou hit on there is the idea: of
(08:22):
we care about when you earn the money,not necessarily when you get paid.
So let's say you get paid on the 10thand 25th, like a lot of state agencies
and you work until the 30th,you can still get paid that month.
You retire on the 10th.
You just can't earn any money from themthat month.
I've had that conversationquite a few times of trying to lay
out the wording to get that one,the dominoes lined up.
(08:46):
One of my favorite phrases there.
Yeah.
This is a lot of good informationfor those of our listeners
who are getting ready to retireand just things to be aware
of when you're making those big plansfor the next stage of life.
Yeah.
Plug for my unit as we talk on the phones,one of our favorite questions
(09:06):
to get is, “whatdo you think I should know?” Oftentimes
we have a lot more knowledgeor we're kind of seeing things,
but we don't want to be overwhelming.
We don't want to share too much.
But also, we're ready to help.
That's what we enjoy in the job is beingable to help people in this transition.
So feel free to reach outand we will guide you
through whatever we can seeand predict, we’ll make you aware of.
(09:29):
Yeah, that's a great suggestion that youif you do call DRS
with some retirement questionsyou can ask your retirement specialist:
“What do you think I should know?”Yeah, absolutely.
Perfect.
Jenny, it's probably also a good reminder
for our listenersthat if they have questions for us
that they want us to talk abouton the podcast, that they can email us
at drs.podcasts@drs.wa.gov.
(09:52):
Yeah, perfect. Send us your questions.
And additionally,you can also send a message
to DRS through your online accountwithout having to wait on the phone.
There we go.
All right.
Perfect. Thanks, John.
Thank you John.
Yeah, thanks for having me.
Thanks for listening.
(10:13):
And now we'd love to hear from you.
What topics would you like to hear about?
What questions do you have for us?
Send an email to drs.podcasts@drs.wa.gov.
That's drs.podcasts@drs.wa.gov.
The Department of Retirement Systemsprovides this podcast as a public service,
but it's neither a legal interpretationnor statement of DRS policy.
(10:34):
References to any specific productor entity do not constitute
an endorsement or recommendation.
The views expressed by guests are theirown, and their appearance on the program
does not imply an endorsement of themor any entity they represent.
Views and opinions expressed by DRSemployees are those of the employees,
and do not necessarily reflect the view ofDRS or any of its officials.
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