Optimizing Your Retirement Income: What Works Best and Why
by Christine S. Fahlund
With the oldest baby boomers hitting 62 this year, and more than 70 million of them likely to enter retirement over the next 20 years, the hard truth is that only a small minority are accumulating enough savings to provide for their income needs during decades in retirement.
This uncomfortable reality is particularly true given the overall rise in life expectancy, sharply rising medical costs, the trend toward more active and costly retirement lifestyles, and, not least, the relentless toll of inflation.
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For the financially fortunate with sufficient personal savings, Social Security benefits, and corporate pensions to meet all their retirement income needs, the main financial challenges of retirement are how to invest and spend wisely and perhaps provide for their heirs as well.
However, more than 75% of all workers age 55 or older report having less than $250,000 in investments apart from their homes and pensions, according to a recent survey by the Employee Benefit Research Institute (EBRI). At a recommended initial withdrawal amount of 4%, that provides an income from their investments of just $10,000 in the first year of retirement. Nevertheless, those approaching retirement can improve their income and financial security in retirement depending on their flexibility and their approach to four big decisions that are usually under their control:
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Discussion
Good ideas. Retirees might also be wise to reduce their housing costs. Pare back.
Also live within your budget -- be realistic not extravagant. Don't feel too bad if you over spend your first year or so - most retirees do. But then return to reality.
I was told decades ago to invest 50% in equities and 50% in fixed income products. It's a good idea in retirement as well.
posted 11 months ago by Gus from Florida
Good article with many excellent recommendations. I have just recently retired after working to age 70 and I used those extra years of income to build up our retirement PF even during the "Great Recession" and the downturn later in 2011. The first decade of the 21st century was not kind to workers attempting to build up a retirement nest egg, but increasing levels of savings represented one way to offset this problem. Staying fully invested and practicing asset allocation also helped.
posted 10 months ago by Curt from Georgia
Retiring and remaining debt free has been the
key for us. Thank heaven we didn't fall into
the refinancing trap. When you owe little,
you can live well on less.
posted 9 months ago by Donald from Virginia
