finances
Start thinking about your retirement income plan
If you ’ re getting close to retirement , you ’ re probably thinking about the ways your life will soon be changing . And one key transition involves your income – instead of being able to count on a regular paycheck , as you ’ ve done for decades , you ’ ll now need to put together an income stream on your own . How can you get started ?
It ’ s helpful that you begin thinking about retirement income well before you actually retire . Many people don ’ t – in fact , 61 % of retirees wish they had done better at planning for the financial aspects of their retirement , according to an Edward Jones / Age Wave study titled Retirement in the Time of Coronavirus : What a Difference a Year Makes .
Fortunately , there ’ s much you can do to create and manage your retirement income . Here are a few suggestions :
• Consider ways to boost income . As you approach retirement , you ’ ll want to explore ways of potentially boosting your income . Can you afford to delay taking Social Security so your monthly checks will be bigger ? Can you increase your contributions to your 401 ( k ) or similar employer-sponsored retirement plan , including taking advantage of catch-up contributions if you ’ re age 50 or older ? Should you consider adding products that can provide you with an income stream that can potentially last your lifetime ?
• Calculate your expenses . How much money will you need each year during your retirement ? The answer depends somewhat on your goals . For example , if you plan to travel extensively , you may need more income than someone who stays close to home . And no matter how you plan to spend your days in retirement , you ’ ll need to budget for health care expenses . Many people underestimate what they ’ ll need , but these costs can easily add up to several thousand dollars a year , even with Medicare .
• Review your investment mix . It ’ s always a good idea to review your investment mix at least
once a year to ensure it ’ s still appropriate for your needs . But it ’ s especially important to analyze your investments in the years immediately preceding your retirement . At this point , you may need to adjust the mix to lower the risk level . However , you probably won ’ t want to sell all your growth-oriented investments and replace them with more conservative ones – even during retirement , you ’ ll likely need some growth potential in your portfolio to help you stay ahead of inflation .
• Create a sustainable withdrawal rate . Once you ’ re retired , you will likely need to start taking money from your IRA and 401 ( k ) or similar plan . But it ’ s important not to take too much out in your early years as a retiree , since you don ’ t want to risk outliving your income . A financial professional can help you create a sustainable withdrawal rate based on your age , level of assets , family situation and other factors .
By planning ahead , and making the right moves , you can boost your confidence in your ability to maintain enough income to last throughout your retirement . And with a sense of financial security , you ’ ll be freer to enjoy an active lifestyle during your years as a retiree .
This article was written by Edward Jones for use by your local Edward Jones Financial Advisor . Edward Jones , Member SIPC
Steven C Booth , CRPC ® Financial Advisor
349 Langdon Street Somerset , KY 42503 606-679-1116
edwardjones . com
2021 SENIOR LIVING • 25