Developing a Plan to Make Your Income Last in Retirement
Brought to you by Your Money Line
Once you retire, your income will come from a combination of different sources, which can include: a pension, savings, investments, social security and part-time work. The goal is to understand the potential for each of these accounts to ensure income security throughout your retirement journey. Because we all come from different walks of life, we acknowledge that financial journeys are different for everyone. Some might not have been able to start a Pension Plan or savings and investment accounts, others might not qualify for SS benefits and some might not be able to work part-time — all for different reasons. Knowing this, we hope the following information is useful to you. Let’s break down the potential income sources:
Pension Plan: If you have the Pension Plan, you will receive monthly payments for life. Having a consistent and guaranteed income is a great start to building financial stability in retirement and taking the worry out of retirement.
Savings and Investments: Retirement savings accounts like the Tax-Deferred Retirement Account 403(b)/Roth 403(b) are a great source of retirement income, but they do require knowing how much and how often you should withdraw from these accounts. There are myriad ways you can tackle withdrawing from savings during retirement. You need to be careful to avoid drawing too quickly on these assets to ensure they will last, especially if the bulk of your retirement income stems from social security. If you’re unsure how to draw down on your savings, consider working with a financial professional to devise a distribution plan.
Social Security: Your monthly social security benefit is based on income earned during your working years, the year you were born, and the age you decide to start taking benefits. The good news is that this source of income is also fixed, which can help you plan financially for retirement. You can learn more about your social security benefit by visiting www.ssa.gov.
Part-time Work: A part-time job is a great way to feel purpose in retirement — whether it’s something you want or need to do. However, it’s unrealistic to think that you will be physically able to work throughout your entire retirement. Relying on part-time jobs or full-time jobs during retirement, as a main source of income, can cause issues. If part of your retirement plan involves working, ensure you’re prepared to eliminate that income source by saving along the way. Keep in mind, if you retire before reaching full retirement age, part-time work could impact benefits such as social security income. We recommend consulting with experts such as the financial guides at Your Money Line on what is best for your specific situation.
If you aren’t at retirement age yet but want to take steps towards securing income during that time, there are a few things you can do:
- Participate in Your Money Line’s Mock Retirement course to see if you can live off what you have now.
- Try to maximize your retirement accounts by making consistent deposits and taking advantage of an employer match, if offered.
- Stick to a budget and save often.
If you would like to discuss how to prepare for retirement, the financial guides at Your Money Line are here to help. Visit our Your Money Line page to learn more.
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