From both clients and readers, here are the seven most common retirement questions I am asked.
When Should I Begin Taking Social Security?
The when to take Social Security question is at the top of the list because it is a decision nearly every American must make. You get less monthly income if you begin benefits early, and more monthly income if you begin benefits at a later age. Too many people assume this is a simple decision – and they take the option that puts more money in their pockets early on. A simplistic choice like this can cost a family thousands (in some cases even hundreds of thousands) of missed benefits. Rather than making a decision about Social Security independently of the rest of your situation, look at how it fits in holistically with all aspects of your retirement income plan, such as inflation, longevity, the need for guaranteed income, the amount of financial assets you have, your plans to work part-time in retirement, and your tax situation.
Other variables such as your spouse or ex-spouse’s income may play into this decision as well.
How Long Will My Money Last?
This is a common retirement question, and unfortunately, one of the most difficult ones to answer. To answer it you must estimate things like how long you will live, how much you will spend, what rate of return you will earn on savings and investments, what types of medical expenses you will incur, and what tax rates will be. Once you have projected these items, you can estimate how long your money will last in retirement. However, rather than settling on a “number” it is best to come up with a few different scenarios that show you how much you would need if your returns were lower, or if you spent more.
This type of planning will give you a range of savings needed, which I think is a better approach than targeting a single number.