Retirement Income

Retirement income does not have to be a stressful subject if you plan early and save as much as possible for the later years. Many businesses today no longer offer pensions as a way to show appreciation for their employees with tenure. Today, it is up to the individual to save for their later years. Retirement income can come from a variety of sources. If you have a 401k or an IRA, you may withdraw money from the plan after retiring. You may have Social Security benefits, or you might want to work a part time job. You can work with a financial advisor to help you with a plan that will provide you with the security you need later in life.

Determining Savings Requirements

The first step to determining how much retirement income you will need is to understand what kinds of retirement expenditures you will have. Take a look at your current weekly and monthly bills. Which of these will be paid off by the time you retire? Will you use a 401k or an IRA? Will you have any new ones that are not on the list, such as a new home, or motor home? Once you have an idea of what the expenditures will be, you will be able to begin to plan for income requirements after retirement.

There are many ways to determine retirement income needs using financial advisors and calculators. If you are young, you will most likely not have as good of an idea about your retirement expenditures as you will later in life. You will be able to determine, however, what the approximate increase in living expenses will be, based on averages. A financial advisor can help you with this calculation. Once you have an idea, you can see how important it is to start saving and investing early so you will have an income from your investments long after you retire.

If you are getting ready to retire, you may be able to tell if your investment strategies have given you enough retirement income to provide you with the income you are comfortable with, or if you need to work longer, or perhaps get a part time job. Many retirees find that working part time not only allows them to increase their retirement income but also gives them a sense of accomplishment, even if it is not necessary financially. By working longer, you will also give your savings a chance to increase even more, allowing you more financial freedom later.

If you want to get out of the workforce and have plans for building a dream home, or touring Europe, you will need to ensure that your savings will support your new lifestyle. If you have enough equity in a current home to sell it and build that dream home, you are ahead of the game. However, you will need to remember that there is a timeframe between when the new home is complete and when the old one sells that you may need to make payments on the new home. This is especially important to think about if the current economy is down and the old home's equity is not quite as high.

Social Security

Many Americans plan to use their Social Security benefits as a primary source of retirement income. Social Security was established in 1935 to ensure workers had a source of income after leaving the workforce. Anyone who has a job should be paying into their Social Security fund, as it is part of the payroll taxes taken out of the paycheck. Social security benefits have a specific age requirement before recipients can start receiving their benefits unless they are under a disability. Normal retirement age for Social Security benefits vary depending on the year you were born. It could range in age from 65 to 67.

Once you reach normal retirement age, you are not required to start withdrawing from Social Security. The benefits can be passed on to your spouse. By not drawing income from the benefits, you will receive delayed retirement credits that can increase the benefits until the age of 70. If you plan to use your Social Security as your primary source of retirement income, talk to a financial advisor to determine if the benefits are enough for your lifestyle needs.

Although retirement income is important, it does not have to be scary. If you plan ahead and invest wisely, you will likely have the financial income you need when you are ready to retire. Work with an investment advisor to determine the best way to save for your golden years, then sit back and watch your savings pile up. You can also work with financial advisors for a variety of other needs as your life changes. From buying a home, to planning for parenthood, or saving for a college education a financial advisor is an excellent resource.

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