How to Ensure More Lifetime Income during Retirement

August 8, 2007 By Matthew Paulson

If you’re in your 40’s or 50’s, you’re probably beginning to start thinking about retirement. It’s still a ways off in your life, but it’s certainly time to begin thinking about it. You might have been a diligent saver since your twenties and have a large nest-egg to take care of you, but you would be the exception rather than the rule. The fact is that most people retire very close to broke and have to rely on Social Security just to get by. If you’re going to retire in a couple of decades or less and aren’t where you should be financially, don’t worry, there’s hope.

There are four ways that one can increase their income during their retirement years:

Delay Your Retirement – Most people are perfectly healthy at age 65 and have several years left of work in them if they chose to. Delaying retirement by a few years will allow you to save more money for when you do retire, but more importantly prevent you from dipping into your nest-egg for the period of time that you are working. When you do retire, you’ll have a larger nest egg to invest with and be able to provide yourself with more income during your retirement years.

Invest More Now – If you’re in your 40’s or 50’s and haven’t saved a dime for retirement, you can’t afford not to start saving! Start putting away money now into solid mutual funds so that you can have some sort of nest-egg to live on when your retirement age finally does come around. Even if you’re 45, you still have 2 decades of tax free growth inside of an IRA or 401k plan. You can easily build up a few hundred thousand dollars to supplement your social security now.

Wait on Social Security – If you’re in great health, delay taking your social security payment until age 67, or whenever it is that you qualify for the full benefit. Chances are you’ll be working until that age anyway, so when your social security check does come around, it’ll be for a much larger number than if you started picking it up at age 62.

Grab an Immediate Annuity – Annuities are given a very bad rap by most financial advisors, and for good reason. They’re high in fees and have a lot of “gotchas” if you want to take the money out. They do serve well for the purpose of providing you a stable income over a long period of time. If you don’t need the money for literally anything else and aren’t concerned about the principal, consider the opportunity to buy annuity or buy future payments, these might be a good way to ensure a stable income during your retirement years. In most cases there are better options than annuities, so speak a fee-only financial advisor before considering this as an option. Make sure to visit a fee-only financial advisor because they aren’t selling any financial products to you and have no conflict of interest. If you’re financially savvy, you can also consider the opportunity to buy structured settlements.

Planning for retirement is a tricky business, especially if you don’t start early. Fortunately there are some things that people in their forties and fifties can do to make their retirement years much more tenable.

Posted in retirement planning

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