Helping Your Money Last After Your Last Paycheck

Helping Your Money Last After Your Last Paycheck



Helping Your Money Last.. .​

After Your Last Paycheck
A look at​ ​ different ways to​ afford retirement
Todays seniors can expect a​ longer retirement than their parents .​

That means more years to​ finally do what you want to​ do,​ including travel and​ hobbies not to​ mention spoiling the​ grandkids .​

But a​ longer retirement also means more years of​ money going out and​ no paycheck or​ only a​ small one coming in​ .​

Thats why seniors need to​ be smart about how they pay for their retirement years.
You really need to​ have a​ strategy to​ make sure your savings last,​ said Lee Bowman,​ National Coordinator of​ Community Affairs at​ ​ the​ FDIC.
To help you set or​ adjust your own plans for affording retirement,​ FDIC Consumer News offers this look at​ ​ some different sources of​ money,​ including some potential pitfalls to​ avoid .​

But first,​ remember that this is​ general guidance only .​

Your own need for retirement money will depend on​ factors such as​ your healthcare costs or​ whether you plan to​ earn parttime income .​

as​ with any major financial decision,​ be sure to​ consult with financial advisors and​ loved ones to​ decide what strategies are best for you.
Social Security and​ Pension Benefits Your first order of​ business Determine when the​ best time is​ to​ start tapping this money .​

For example,​ if​ ​ you start receiving your Social Security benefits before your full retirement age which could be anywhere from 65 to​ 67 under current laws,​ your benefits will be reduced permanently,​ and​ perhaps significantly,​ from what they would be at​ ​ your full retirement age .​

And if​ ​ you receive Social Security benefits early,​ but you continue to​ work and​ your earnings exceed certain limits,​ your benefits will be reduced even more until you reach full retirement age .​

On the​ other hand,​ if​ ​ you delay collecting Social Security until after your full retirement age,​ you can continue to​ work and​ still get your full retirement benefits,​ or​ even higher benefits,​ no matter how much you earn.
Heres basic guidance from the​ Social Security Administration SSA as​ a​ general rule,​ early retirement will give you about the​ same total Social Security benefits over your lifetime,​ but in​ smaller amounts to​ take into account the​ longer period you will receive them .​

There are advantages and​ disadvantages to​ taking your benefit before your full retirement age .​

The advantage is​ that you collect benefits for a​ longer period of​ time .​

The disadvantage is​ your benefit is​ permanently reduced.
Employer pension plans usually have options somewhat similar to​ those of​ Social Security .​

Contact your employers personnel department for guidance.
No matter when you decide to​ start receiving your benefits,​ remember that it​ could take several weeks to​ receive your first payment .​

Also consider having your payments deposited directly into your bank account so you dont have to​ worry about a​ check getting lost or​ stolen in​ the​ mail.
IRAs,​ 401ks and​ Other Retirement Savings Plans as​ with your Social Security and​ pension benefits,​ you may want to​ delay tapping into your retirement accounts as​ long as​ possible so they can continue to​ grow to​ cover unexpected medical costs in​ the​ future or​ to​ protect the​ inheritance for your heirs .​

However,​ if​ ​ you need to​ supplement your income,​ Individual Retirement Accounts IRA and​ other retirement savings can be a​ good source.
Before you start withdrawing money from your retirement accounts,​ most financial planners suggest setting a​ target annual withdrawal rate .​

Make it​ low enough to​ avoid depleting these funds too quickly .​

You can fine tune your withdrawal strategy each year,​ preferably with the​ guidance of​ your financial or​ tax advisor .​

For example,​ if​ ​ your personal situation changes,​ you can adjust how much you should withdraw.
Also review your retirement portfolio — your mix among stocks,​ stock mutual funds,​ CDs certificates of​ deposit,​ bonds and​ so on​ — to​ be sure its welldiversified .​


Another caveat if​ ​ you have retired,​ every year after age 70 ½ be sure to​ take out at​ ​ least the​ minimum required distribution from your taxdeferred retirement savings plans except Roth IRAs to​ avoid large IRS tax penalties .​

if ​ you are still working at​ ​ 70 ½ or​ later,​ you do not need to​ start taking minimum distributions from your employers plan until April 1 of​ the​ year following the​ year you finally retire.
Remember,​ you only have to​ withdraw the​ money,​ you dont have to​ spend it,​ said Heather Gratton,​ an​ FDIC Senior Financial Analyst .​

if ​ you dont need the​ money you can reinvest it​ somewhere else,​ such as​ in​ a​ bank savings account .​

She added that,​ because each persons situation is​ different,​ its best to​ discuss your strategy with your tax or​ other advisor.




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