Traditionally, the socially accepted age of retirement has been 65, which was the age in which you can first receive your full retirement benefit from the Social Security Administration. Does it still make sense to continue to benchmark our appropriate retirement age with when we are to receive our social security benefits? As we continue to live longer as a society, can continue to retire in our sixties and be able to fund our lifestyles for 20 to 30 plus years? If you are on the verge of retirement I hope these are questions that have come up in your most recent visit to your financial advisor.
With more than one in three women and one in five men who are 65 years old today reaching the age of 90, are you planning on having your retirement savings stretch out 30 plus years? This is where we might think that working a bit longer might help mitigate the risk of outliving our retirement savings. Not so fast. How many 65-year-old individuals are in the workforce today? The answer is not many, by age 63, over half of the population is no longer working. This is where a bit of planning can help you navigate these potential retirement pitfalls.
The clients that I work with have typically been planning their retirement with a Financial Road Map for years before the date of their retirement. They are confident when they decide to make their retirement because they have someone it their corner who has put in the time and effort to help assure them that they are making the best decision for themselves and their family.
Many individuals aren’t ready for full retirement, but are ready to start taking a step in that direction. I see this as being the transition period that can bridge our traditional age 65 retirement to our new standard of age 70. Use those 5 years to start transitioning into what you want your retirement to look like while delaying social security those 5 years to take advantage of Delayed Retirement Credits, which will increase your monthly benefit from full retirement age to age 70 by approximately 8% per year.
If you don’t want to be in the workforce until age 65 let alone age 70, then I suggest saving early and often paired with a financial plan. For our younger generations (Millennials and Gen Xers) out there, our social security benefits will slowly begin to erode away and with student debt and our perceived lifestyle needs eating up more and more of our monthly incomes we may lose the concept of retirement completely.
I’m here to help, let me know if you have questions. Thanks for reading.