Retirement Income: When To Take Social Security
A few months ago Forbes editors and contributors created a editorial special feature entitled “In Search Of Retirement Income” . In it we outlined some of the best ways we know to keep that cash flowing during one’s golden years. With interest rates on most safe securities in the “pitiful” territory, there is an insatiable appetite among investors for income. This is especially true for the 10,000 boomers who will turn 65 every day for the next 15 or so years.
Despite our “In Search Of Retirement Income” report I am constantly asked by readers and those approaching retirement about this topic. So I thought it would be appropriate to put up a fresh post featuring some of our most useful articles for those concerned about retirement income. Below are descriptions and links to five our greatest hits in retirement coverage:
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Another excellent story on retirement income that we recently published takes a step back and discusses the best way to structure and draw down your assets during retirement. In “A Bucket Strategy For Retirement Income” industry expert Noelle Fox walks retirees through the merits of an innovative strategy that has you put all of your money into different asset buckets and draw from these buckets during predefined multi-year retirement periods. In other words during years 6 to 15 of your retirement you might be drawing down your fixed income assets and then from years 15 on you would take money from your stock portfolio. The article discusses whether its more prudent to use this approach than the more common systematic 5% per year withdrawal method from a target date fund.
Janet Novack‘s “The Big Decision: When To Take Social Security” will give you practical advice on an important question facing us all. It makes a big difference in your income whether you elect to begin receiving payments from Social Security at age 62 or 66 or at age 70. Also should you start receiving benefits even if you are still working? The answers to these seemingly simple questions can be more complicated than you think. Please read Janet’s story for clarity.
Then there is the topic of 401(k)s. In the old days people who worked for a long time for big companies like AT&T and General Motors and Pfizer could rely on income from their pension plans to see them through retirement. However about 30 years ago U.S. corporations started eliminating defined benefit pension plans en masse in favor of a new tax deferred vehicle called the 401(k). Suddenly 401(k)s became a great way to transfer risk from corporations to individuals, and American workers were unknowingly ushered into the self-service retirement age. Defined contribution plans meant that companies would help you accumulate a retirement nest egg, but it was up to you to grow it and then to manage it for income in retirement. This hasn’t turned out so well and there are millions of aging boomers fretting over depleted and deflated 401(k)s. In fact Fidelity recently reported that even for those 55 or older who have been saving for at least 10 years, the average 401(k) balance is a mere $234,000.
Senior editor Ashlea Ebeling’s article How To Make Your 401(k) Last Forever: The Pension Rollover, discusses a novel way to turn your 401(k) into an annuity. In other words a “back to the future” maneuver that turns your 401(k) back into a pension. Not all employers offer it but the demand is out there and the trend is growing.
While most investors would seem to be obsessed with finding reliable and steady sources of income for retirement, one must never forget the impact that taxes have on what we actually get to keep and spend. The following article by the folks at Financial Finesse discusses how important it is to be strategic about which retirement assets are in which accounts. It’s important to be smart about which funds or stocks or bonds go into your IRA’s and which go into taxable accounts. It can make a big difference in terms of what your actual retirement income is. Click to read :