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retirement

Best and Worst States for Retirement Finances

Where you live in retirement can make a big difference. Learn which are the best and worst states to retire to. You may be surprised!

Ready, Set, Go! When To Start A Pension Payout?

The question comes up often: I’m ready to retire at age 55, and I can begin collecting my pension right away. Should I? The amount of the pension increases to almost double if I wait to start collecting at age 62, and two-and-a-half times if I wait until age 65. What’s the best way to do this? Obviously, there are a lot of factors that will go into the answer to such a question, so right off, it’s hard to say for sure, but here are the basics of making this decision: These types of pensions are based on the employer’s assumption about your life expectancy. If you live to exactly the expected age, the cost to the employer will be roughly the same no matter which option you choose. You just need to do the math – bigger payments later are made for (expected) fewer years. It goes without […]

Retirement Income Requirement

You know how important it is to plan for your retirement, but how do you get started? One of the first steps should be to come up with an estimate of how much income you’ll need in order to fund your retirement. Easy to say, not so easy to do! Retirement planning is not an exact science. Your specific needs will depend on your goals, lifestyle, age, and many other factors. However, by doing a little homework, you’ll be well on your way to planning for a comfortable retirement. Start With Your Current Income A rule of thumb suggests that you’ll need about 70 percent of your current annual income in retirement. This can be a good starting point, but will that figure work for you? It really all depends on how close you are to retiring, as well as what you’re planning to do while retired. If you’re young […]

Book Review – Choose Your Retirement

The latest book by Emily Guy Birken – Choose Your Retirement – is unlike any other book I’ve read on the subject. Birken takes the time to walk the reader through all of the decision-points that likely will confront you. She spends time acknowledging all of the factors that often face future retirees, including all of the emotional factors that plague us. Author Birken, who you may recognize from her many writing gigs with well-known personal finance outlets including Wisebread, PT Money, Money Crashers and Yahoo! Finance, has really done well with this book, in my opinion. The book provides practical step-by-step guidance and counsel for navigating the internal mental scripts that different personality types face when saving – Money Avoidance, Money Worship, Money Status, and Money Vigilance. Most everyone fits into one of these categories – and each category has it’s own pitfalls and benefits. This book takes you […]

Add 1% More to Your Savings

Savings rates in America are really not what they should be.  Studies have shown that, in order to achieve the goal of replacing 80% of your average pre-retirement income you should be saving at a rate around 17.5%.  This doesn’t necessarily mean that 17.5% is the right number for everyone, because pensions and Social Security can help out in replacing some of your income in retirement.  But the average savings rate for all Americans is something just south of 5% – so we can definitely do a better job.  So make the effort to apply at least 1% more to your savings rate this November.  It certainly can’t hurt! Below is the list of my fellow bloggers who have written articles showing ways that you can start to increase your savings rate, as well as showing what the benefits can be.  Thanks to everyone who has participated so far – […]

It Pays to Wait For Your Social Security Benefits

It’s usually best, for most things in the financial world, to act now rather than waiting around. The notable exception is with regard to applying for Social Security benefits. We’ve discussed it before (in fact part of this article is a re-hash of an earlier post) but it is an important point that needs more emphasis, in my opinion. As you’ll see from the table below, if you’re in the group that was born after 1943 (that’s you, Boomers!) you can increase the amount of your Social Security benefit by 8% for every year that you delay receiving benefits after your Full Retirement Age (FRA – see this article for an explanation). Delaying Receipt of Benefits to Increase the Amount If you are delaying your retirement beyond FRA, you’ll increase the amount of benefit that you are eligible to receive. Depending upon your year of birth, this amount will be […]

Advice on Social Security Benefits

Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. I get a lot of questions about when to take benefits, how to use File & Suspend most efficiently, and when to begin Spousal Benefits.  And unfortunately, I am often at a loss for giving a specific answer to the individual, because I just don’t have enough information. Image by wallyg via Flickr Social Security planning has very many factors that must be considered – for example: It’s important to consider earnings if you’re filing early and continuing to work (see Social Security Earnings Tests for more information), […]

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