Retirement brings many changes and quite a few of them are positive: more time to spend with friends and family, the opportunity to enjoy new hobbies, and even the chance to travel. Some things, however, carry into retirement, and one of those things is bills. Given you’ll still have costs to cover even when your full-time working days are over, it’s important to have a steady stream of retirement income. Following are some sources to consider for that needed income:
The projected average monthly Social Security payment in 2017 is expected to be $1,360 for individuals and $2,260 for couples1 — which can help cover the costs that don’t disappear in retirement. It’s important, however, to be strategic about when you begin drawing Social Security benefits. In general, someone who delays claiming Social Security can receive 6-8% more in benefits for each year they postpone between age 62 and 70 — so if you’re able to put off claiming Social Security for a few years, you could help increase this source of retirement income.
You worked hard for many, many years to put away money into a 401(k), IRA, or other retirement savings vehicle. Once you retire, it’s time to use those dollars. It’s key, however, to have a budget and well-thought-out withdrawal plan so you don’t run through these funds too quickly — or run out of them altogether.
Just because you retire doesn’t necessarily mean you should stop investing. By keeping some of your money in equities, bonds, and other investments, it can continue to grow — and that growth can help you keep up with inflation and provide you with retirement income. Just as during your working years, however, it’s critical to bear in mind your age, appetite for risk, and goals when deciding what types of investments to have in your portfolio. A financial advisor can go a long way in helping you make these important choices.
In this “gig” economy, there are plenty of opportunities for part-time, freelance, or contract work — and the money earned from these jobs can help cover costs in retirement. Be aware, however, that such income could impact your tax situation, so be sure to understand those potential changes before you take on this type of work.
Once you reach retirement, you’ll have an array of new, exciting options — but not paying your bills isn’t one of them. Each person has different needs and there’s no uniform approach to creating the income you’ll need to cover costs in retirement. So consider all of your options and work with people you trust in order to make a plan. After all, your retirement years are meant to be spent enjoying life — not worrying about how to pay for it.