Retirement Income Planning
The goal of retirement planning is to ensure you have income years – and decades – after you stop working.
Most people have the option to take early retirement and collect Social Security at age 62, but you’ll earn more the longer you wait. Full Retirement Age is 66 years and two months for those born in 1955 and gradually increases to 67 for those born in 1960 and after. You can increase Social Security payments 8% annually each year you work past your Full Retirement Age up until you reach 70.
FRA also applies to pension plans, such as employer-sponsored plans -- though many pensions also grant full benefits after a certain number of years on the job.
Social Security income is vital for most people approaching retirement – and those already in it. Unlike other sources of income, Social Security benefits are periodically increased due to inflation.
You have a choice to make If you and your spouse are both eligible for Social Security income. You can choose to take your individual accounts or have one of you draw what are called spousal benefits. Receiving retirement income from your individual accounts often makes sense if you and your spouse earned about the same over the course of your working lives. Drawing from one account and spousal benefits is a good choice if one person earned a lot more than the other.
Medicare programs can help you manage health care expenses starting at 65 years old. Then at 72, you’ll face tax penalties if you haven’t begun withdrawing from your tax-deferred retirement plans.
Of course, the further from retirement you are, the better the chance these rules will change before you are eligible for Social Security benefits or Medicare. Investing decades away from retirement can help you compensate for the uncertain future of federal programs.
At every phase of life, your expenses should not exceed your income – add to that the expectation in retirement of a sustainable standard of living for years to come after your career.
The switch to defined-contribution retirement plans, such as 401(k)s and IRAs -- opposed to employer pensions -- empowers investors to manage their own money and ensure they have enough regular income in retirement.
We’re here to help you make sense of it all with the promise to always work in your best interest.