Careful Planning the Key to Comfortable Retirement
The question of when to retire has never taken on greater significance
A proposal by the French government last fall to raise the legal retirement age there from 60 to 62 sparked riots, the burning of cars and smashed storefronts. The age was raised nonetheless because
But there are complications:
Americans are living longer, spending just as much in retirement as they did while working and are still digging themselves out of one of the nation's worst financial debacles in history.
"Retirement thinking has changed because the world has changed and people are regularly living into their 80s," explained
Therefore, the choices include staying on the job longer than planned, taking
"I often ask my clients of retirement age, 'So what is our next adventure?'" said
Many people stay on the job for financial reasons, such as children in school, mortgage payments or inadequate investments, while others simply feel they still have something worthwhile left to give. The "tough love" advice of many financial planners is to hang in there on the job until you qualify for full
"Since you can retire at age 66 with full
For baby boomers still working beyond 66, it also makes sense to postpone your benefits until age 70 because it will result in a significant increase that gets compounded over your lifetime, she added.
"If you don't need the money, you're going to have to pay taxes on it, and there's no need to do that," said Zohlen. "Even if you have retired and are working part time, you do not want to take your
In addition, one spouse may be entitled to a higher
"Of course, anyone who is really tight for cash will need to take them now even though the benefit would be higher later," said
Another possibility is working while receiving
Keep in mind that if you take benefits before full retirement age, your annual earnings over
Keep your total income in mind.
Many retirees no longer have mortgage interest deductions. They must also withdraw their traditional individual retirement account distributions after reaching age 70 1/2. Deciding when to withdraw retirement account money to your best tax advantage requires careful planning.
"I am clearly seeing more retirement anxiety from clients in regard to how long their money will last or whether they should go back to work -- even if we can show them projections that they don't need to work," said Balasa. "But unless people really have something they want to do part time or feel that they must have a job, I don't think many of them are really all that excited about the prospect of going back to work."
It's a time to handle money carefully.
One of Balasa's retired clients was actively looking for work but gifting a considerable amount of money to his children. Balasa told him to pull back on that generosity.
"Focus on what you can control, such as your spending rate, expenses and the tax efficiency of your investments," Balasa concluded. "Don't be paralyzed by worrying about what Fed Chairman
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Personal Finance - Careful Planning the Key to Comfortable Retirement
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