By: James Royal, Bankrate featuring Vincent Birardi, CFP®, AIF®, Wealth Advisor at Halbert Hargrove
When you stop working for a living and have to rely on your savings to fund your retirement, it can be stressful. No longer do you have the safety of your next paycheck to tide you over.
You’ll need to have your finances for the next couple decades (or more) already figured out. And the last thing you want to do is spend your golden years worrying about how to make ends meet.
That’s why it’s critical to address the following key areas so that you can approach retirement with security. By triple-checking your finances, you can hit retirement ready to roll and with the confidence to enjoy that time, secure in the knowledge that you won’t outlive your income.
5 areas to address for retirement
By working through the following areas yourself or with the right financial advisor, you can prepare yourself for the key retirement issues and go with confidence into your golden years.
Getting Social Security right
Social Security is a cornerstone of working Americans’ financial plans, so it’s important to get it right. Social Security offers a reliable stream of income that you can’t outlive, but you’ll need to consider the best way to file and how you can max out benefits in a way that fits your needs.
One way to max out your benefits is to simply wait to file, since your benefits grow over time.
“Social Security from age 62, the first year you can claim it, to age 67 has an average 6 percent growth rate,” says Kris Whipple, partner and financial advisor at Kristopher Curtis Financial in Nashville. “From age 67 to 70, the average growth rate is 8 percent. That’s a pretty good return that’s ‘guaranteed’ by a government issuer.
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Social Security is a complex program with many options, however, so it can be useful to coordinate with a spouse on how to claim, if you’re trying to max out your lifetime benefit.
“The right decision for each individual or couple can depend on several factors, including the earnings history of each person, the value of other assets and income in the retirement portfolio, and expected longevity of each person,” says Russell Hackmann, CFA, and president with Hackmann Wealth Partners in Stamford, Connecticut.
Specialized software can help you optimize your Social Security strategy.
“You can use an analytical software package like Social Security Analyzer or maximizemysocialsecurity.com that can calculate the maximum lifetime Social Security income for you and your spouse and at what age to claim your benefits to achieve those maximum projected benefits,” says Vincent Birardi, CFP, wealth advisor at Halbert Hargrove.
