Whenever the topic of planning for retirement comes up, the questions start flowing…
When should I retire? Can I afford it? What if I live to 100? Where am I going to live?
… and the list goes on!
There are so many variables involved, but you can start by discussing “income” with your Advisor. Planning for and understanding retirement income will help answer most of these questions.
You work today to generate income to sustain your lifestyle. The idea of retirement, put simply, is having other sources of income (preferably guaranteed sources) to replace the need to work to generate income. Retirement income can come from many sources; social security benefits, withdraws from retirement or savings accounts, dividend paying stocks, bonds, annuities, REITs, MLP’s, CD’s, part-time jobs, rental real estate and on and on…
But where do you start?
Start with understanding your Social Security benefits. Most individuals do not attempt to access the Social Security Administration website until they are just a few years away from retirement. Log on to see your social security benefits projection at full retirement age; waiting until age 70, or electing early at 62. Go to SSA.gov to check it out.
Social Security will be a large percentage (60-70%) of retirement income for most middle-income workers. It is important to understand what this look like so you can start the planning process. A recent study by the Stanford Center on Longevity discussed the most optimal way to maximize retirement income – DELAY benefits until age 70.
Delaying will get you the maximum benefit under social security. This will help later in life, especially as people are living longer and longer. Medical advances now require investors to pay close attention to longevity risk in retirement. Delaying social security helps mitigate this risk.
Do yourself a favor and log on to SSA.gov, and see what this looks like for you. Make this first step in the retirement planning process!
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Click HERE to view the study on retirement strategies from the Stanford Center for Longevity.