Previously, we explored how to future-proof your finances, and why it was important to rethink the concept of retirement in a world where people are living longer than ever. In part two of the series, we talk about how you can adapt your retirement strategies to stay ahead of the curve.
A New Working Model
Saving and investing are important, but to set yourself up for a longer life, you may need to work longer. Putting in more hours can have a big impact. According to Boston College’s Center for Retirement Research, working just four years past age 62 can boost retirement income by a third.
The reasons: The longer you work, the more you can keep saving, delay tapping your retirement assets and delay taking Social Security benefits. When you do start using your nest egg, you’ll have fewer years to fund, so your money can last longer.
What’s more, by holding off on Social Security, you can boost the size of your monthly check — for life. That’s because if you start taking your benefit when you first become eligible at 62, the amount is cut by about 8 percent for each year before your “full” retirement age (now 67 for most workers). But if you wait until full retirement, you’ll get your full benefit. And if you put it off longer, you’ll get a lifetime bonus for each month you wait until age 70.
Even so, finding employment in your 60s and 70s may be tougher than you think. A study by the AARP found that ageism at work is all too real. So it’s important to nurture your career and keep your skills up to date, in order to remain relevant in the workplace.
Creating Income During Retirement
Even though it’s adjusted for inflation each year, Social Security makes up only about 40% of the average worker’s retirement income. The rest has to come from somewhere else. No wonder financial planners say their clients’ key concern is running out of money in retirement.
This is where guaranteed annuities – a fixed sum of money that you’re regularly and routinely paid for the rest of your life – can play a powerful role in providing peace of mind, and financial security. These investments provide guaranteed income so long as you live (to age 110), so you’ll always know how much you’re taking home, and can count on regular checks. Options include the choice to receive monthly, quarterly, annually, or lump-sum payments, and deliver steady streams of income, making them a key part of any well-rounded retirement strategy.
Popular with investors seeking predictable and stable income, annuities are guaranteed and backed by the issuing company, and come in two varieties: Deferred or immediate. Deferred annuities let you accumulate money while saving for retirement, with payouts that begin years later; with immediate annuities, you invest a lump sum up-front in exchange for payments that start right away.
An excellent choice for anyone who could use reliable payouts, or is concerned they’ll outlive their savings, be sure to speak with your financial planner about them today.
