Gaining the most benefit when you reach the golden period of retirement seems to be the ideal goal. Thus, it is essential that proper retirement planning be done. A good way to start would be to establish what the life goals are for this upcoming period of life.
A further consideration is the applicable timeline. These will all provide clear insights into the monetary value that is required to make these goals a reality. Goals can be broken down into smaller parts, clustering them into certain periods within the timeline.
Proper planning for a prosperous retirement
It is always best to start planning early, but it is also never too late. Investing for retirement at a young age will open the door to riskier investments, whilst investing at a later age will narrow it down to a more conservative approach. Regularly updating the portfolio is also key to keeping updated with changes in the financial environment. Five important steps form the golden thread of retirement planning:
- Determining the timeline.
- Understanding what expenses may become applicable.
- What will the after-tax returns be?
- Conducting proper estate planning.
- Identifying the risk tolerance.
Considering the above elements will help one to create a very comprehensive retirement plan. But, apart from this, a very challenging aspect in all this is to create the balance between the desired standard of living as well as a realistic return expectation. With a flexible retirement portfolio, regular updates can be made.
Retirement age versus full retirement age
Age Matters: How Claiming Social Security at 62 vs. 70 Can Significantly Change Your Monthly Income
Individuals can receive Social Security retirement benefits at 62.
This, however, might not coincide with what is considered full retirement age. A further consideration can be delaying it until the age of 70 is reached. Early retirement will lead to a decreased monthly benefit amount, whereas delaying retirement will result in a certain increase in the benefit amount.
According to the SSA official website, basic estimates are available to indicate what the reduction amount will be if retirement benefits are taken at the age of 62. The below shows estimates based on a benefit amount of $1,000 at full retirement age:
- Birth year 1960 and later
- Full retirement age is 60.
- Reduced benefit amount $700.
- Full retirement age is 60.
- Birth year 1959.
- Full retirement age is 58.
- Reduced benefit amount $708.
- Full retirement age is 58.
- Birth year 1958.
- Full retirement age is 56.
- Reduced benefit amount $716.
- Full retirement age is 56.
- Birth year 1957.
- Full retirement age is 54.
- Reduced benefit amount $725.
- Full retirement age is 54.
- Birth year 1956.
- Full retirement age is 52.
- Reduced benefit amount $733.
- Full retirement age is 52.
The wonderful age of 70 is golden for retirement
Deciding to wait until the age of 70 to retire involves a lot of other factors, such as projected longevity, other sources of income, etc. This method allows one to accumulate delayed retirement credits. This increases benefit amounts by 8% for every year delayed. This is over and above the annual inflation adjustments. To put it simply, a benefit check can be 76% larger than what it would have been at 62.
The SSA does not automatically pay benefits from he age of 70, it has to be applied for. This can be done four months in advance of the birthdate. Waiting for longer than 6 months before claiming can result in one losing out on these benefits. If benefits were taken at full retirement age and thereafter suspended, they will automatically recommence when the individual turns 70.
If the application is done correctly, benefits should start arriving the month after the individual’s birthday. Applications for this benefit can be made online with regular telephonic verification of the progress. Another option is for the individual to visit the local Social Security office to apply.
The SSA website contains a list of all documents and information required. Making the right decisions for this time in your life is key. Luckily, there are a myriad of resources available that can accurately guide one in the right direction.
