3 Things to Remember When You’re Getting Ready to Retire
Filed under: Retirement
Are you quickly approaching the end of your career? If so, this is likely a very exciting time. While you may miss some aspects of your work life, you also may be thrilled to start your next adventure and live life on your terms. Retirement is an opportunity to set your own schedule and pursue the life you’ve always imagined for yourself.
Retirement can also be stressful and hectic. It’s a big transition that can impact every aspect of your life. You may find after you retire that there are areas of uncertainty or stress that you should have planned for in advance.
Since it’s a new year and the time for resolutions, perhaps you can take time to address some of the final decisions you’ll need to make before you leave the working world. Below are a few common issues that retirees face soon after they end their career. If you haven’t given thought to these issues, now may be the time to do so.
Decide when you will take Social Security.
Perhaps one of the biggest decisions you will face is when to file for Social Security benefits. Your decision is permanent, so there’s no opportunity to make changes once you start receiving income.
It may be tempting to take benefits as early as possible. However, if you file before your full retirement age (FRA), your benefit can be permanently reduced by as much as 30 percent.1 On the other hand, if you delay filing past your FRA, you can get an 8 percent benefit credit for each year you wait, up to a 32 percent total increase.2
Clearly, there is benefit in waiting to file. However, you also need to be sure that you can afford to wait. Take time this year to project your retirement spending and income. If you delay filing, will you have other income you can rely upon? Or do you need Social Security income to fund your expenses?
Develop a strategy for your 401(k).
If you’re like many Americans, your 401(k) is one of your largest retirement assets. The 401(k) plan can be a very effective accumulation vehicle, largely due to its tax-deferred growth and potential employer matching contributions.
As you approach retirement, though, you’ll need to start thinking of your 401(k) as a distribution vehicle. Distribution often requires a different mindset than accumulation, so you may need to rethink your 401(k) strategy. How much risk are you comfortable with? How much income will you need? And should you roll your 401(k) funds into an IRA? These are all questions to consider.
Think about how you will spend your newfound free time.
Perhaps the biggest decision in retirement doesn’t have to do with money at all. Rather, it involves your time and how you will spend it. When you retire, you may have more free time than you’ve ever had. You also may have more money than you’ve ever had. For some retirees, the combination of those two assets leads to excessive spending in the early years of retirement.
Before you leave your job, think about what you will do with your time after you retire. What is important to you? Do you want to pursue a favorite hobby? Do you want to travel? Do you simply want to enjoy time with friends and family? Think about your ideal day in retirement and then consider how you may be able to pursue your interests while still living within your means.
Ready to tie up the loose ends on your retirement plan? Let’s talk about it. Contact us today at Ambrose Financial & Insurance Services. We can help you analyze your needs and develop a strategy. Let’s connect soon and start the conversation.
This information is designed to provide a general overview with regard to the subject matter covered and is not state specific. The authors, publisher and host are not providing legal, accounting or specific advice for your situation. By providing your information, you give consent to be contacted about the possible sale of an insurance or annuity product. This information has been provided by a Licensed Insurance Professional and does not necessarily represent the views of the presenting insurance professional. The statements and opinions expressed are those of the author and are subject to change at any time. All information is believed to be from reliable sources; however, presenting insurance professional makes no representation as to its completeness or accuracy. This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for, accounting, legal, tax or investment advice.
The material is not intended to be legal or tax advice. The insurance agent can provide information, but not advice related to social security benefits. Clients should seek guidance from the Social Security Administration regarding their particular situation. The insurance agent may be able to identify potential retirement income gaps and may introduce insurance products, such as an annuity, as a potential solution. Social Security benefit payout rates can and will change at the sole discretion of the Social Security Administration. For more information, please consult a local Social Security Administration office, or visit www.ssa.gov
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