4 Things You Can Control In Retirement
Retirement is supposed to be an exciting new chapter in our lives. We’d like to think we can live well within our means once we stop working. But when we hear that most Americans will never be able to retire, our alarm bells go off – even when the rational side of our brain tells us to stay calm, that things will work out.
It doesn’t help to realize how much of the situation is completely out of our hands: Ordinary individuals can’t change the direction of interest rates or stock prices. All the same, we have more control over how our retirement will play out than many people think, even as it’s about to start. Four decisions you can make yourself can have a huge impact on how comfortable you will be in this next chapter of your life. They have nothing to do with the stock market or the economy.
Timing for Retirement Success
Knowing where you stand financially, then using those data as a starting point, will help you figure out when to trigger each of these four events. Timing is everything.
When to quit working
Work out the math, or consult a fiduciary financial advisor who specializes in retirement income planning, to determine when or if you can stop working. Work doesn’t have to be a grind if you do something you truly enjoy. It doesn’t need to be full time either. The longer you can bring in outside income, the longer you can leave your own savings alone to grow. Deciding to work an extra two or three years can add as much as 30% to your total income once you do stop working.
When to start tapping your nest egg
It’s bit like trying to land an airplane at just the right spot on the runway. Most retirees don’t know precisely when to start withdrawing from their savings and investments. The Wall Street Journal reported in 2005 that many start withdrawing at the age of 62. For most people, that’s too early. Many experts now use age 95 for financial forecasting purposes. It all depends on how much you have saved and what types of outside income sources you have. Even at age 65, most people probably have another 30 [years] to support themselves after they stop working.
When to start taking Social Security to get maximum benefits
Understanding how Social Security works before you’re eligible to start taking is important. Right now, the earliest age you can start taking Social Security is 62. However, full retirement age is usually 66. Every year you can hold off on taking benefits between the ages of 62 and 70 increases your monthly check. The Social Security Administration’s website explains how retirement ages work. If you have complicated financial family relationships – or you’ve lost a spouse or have remarried – it can be worthwhile to get some solid advice. A qualified fee-based fiduciary advisor can run “what if” scenarios using sophisticated software. That can help pinpoint the optimal time to start taking your benefits.