Retire
Key Takeaways:
- Catch-up contributions allow you to invest an additional $6,500 into your 401(k) and an extra $1,000 into your IRA each year.
- For each year you postpone collecting social security benefits (from ages 67-70), you’ll receive an additional 8% in your monthly benefit.
- Investing in stocks can help provide a buffer against inflation, though it’s best to keep a diverse portfolio including both stocks and fixed-income assets.
- Maintaining your physical health can help you live a longer, healthier life and avoid high medical costs.
A long and fulfilling retirement is a dream for many, but a big part of making that a reality is ensuring that you havesufficient savings to last through your golden years. Here are some key ways to stretch your retirement income to help you feel financially secure.
1. Make catch-up contributions
401(k) and IRA savings accounts are thefoundation of many retirement plans. Youcan make annual contributions of up to$19,500 to a 401(k) and $6,000 to your IRA– unless you’re aged 50 or older. Then,you’re eligible to make catch-upcontributions and invest an additional$6,500 into your 401(k) and an extra$1,000 into your IRA each year.1 This offersan excellent opportunity to boost your nestegg.
2. Wait to claim social security
Another way to stretch your retirementincome: wait to begin collecting yourSocial Security benefits. If you were bornany time after 1960, your full retirementage is 67. You may start collecting yourbenefits before that; however, the amountyou receive will be 30% lower than if youwait.2 For each year you postpone (fromages 67-70), you’ll receive an additional8% in your monthly benefit. If you’re opento remaining in the workforce, it may beworth holding off collecting in the shortterm to enjoy larger payouts in the longrun.3
3. Invest with inflation in mind
When managing your retirement funds, it’simportant to account for inflation.Fortunately, you can buffer yourself againstthe forces of inflation when picking yourinvestments. Unlike bonds and Certificateof Deposits (CDs), stocks often have a rateof return that’s higher than inflation.4 Butthey can also be a riskier financial move.Savvy investors understand that they maywant to balance their stock options withmore stable fixed-income instruments. Thiscan help protect you against marketvolatility while also allowing you to outpaceinflation.5
4. Consider downsizing
Many retirees also save money bydownsizing. With children out of the house,you likely won’t need as much space. Andsmaller homes are simply more cost effective;they typically have lower utilitybills, property tax and mortgages (or rent).An added bonus: They’re much easier to maintain. That means you can spend moretime relaxing and less time cleaning.6
5. Stay healthy
While it sounds simple, one of the bestways to make the most of your retirementmoney is to maintain your physical health.Vitality, our innovative life insuranceproduct offering, recognizes this sentimentand rewards customers for the everydayhealthy choices they make. Things likegoing for a walk, eating more fruits andvegetables, meditating and even getting agood night’s sleep.
Attending regular physicals is also criticalfor preventative care, because earlyintervention is usually more affordablethan treating more advanced illness.Beyond saving you money, staying healthyalso means you’ll be able to enjoy yourtwilight years more fully.7
You deserve the retirement you’ve always dreamed of, filled with the things you love most. With the proper forethought and planning,you can be confident your savings will last.
Want to start your plan for an amazing future?
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Citations:
1 IRS.gov: “Retirement Topics - Catch-Up Contributions” https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-catch-up-contributions
2 Investopedia: “Early Retirement: The Pros and (Mostly) Cons” by Greg Daugherty, November 16, 2020 (updated)https://www.investopedia.com/articles/personal-finance/073114/pros-and-mostly-cons-early-retirement.asp
3 Investopedia: “Early Retirement: The Pros and (Mostly) Cons” by Greg Daugherty, November 16, 2020 (updated)https://www.investopedia.com/articles/personal-finance/073114/pros-and-mostly-cons-early-retirement.asp
4 The Motley Fool: “3 Ways Inflation Affects Your Retirement Savings” by Rita Williams, March 3, 2019 https://www.fool.com/retirement/2019/03/03/3-ways-inflation-affects-your-retirement.aspx
5 The Motley Fool: “3 Ways Inflation Affects Your Retirement Savings” by Rita Williams, March 3, 2019 https://www.fool.com/retirement/2019/03/03/3-ways-inflation-affects-your-retirement.aspx
6 Wisebread: “7 Smart Money Moves for Empty Nesters” by Mikey Rox, January 27, 2017 https://www.wisebread.com/7-smart-money-moves-for-empty-nesters
7 Forbes: “13 Ways to Make Your Money Last in Retirement” by David Rae, September 17, 2019 https://www.forbes.com/sites/davidrae/2019/09/17/money-last-in-retirement/?sh=1aff59b3645b
Financial planning and investment advice provided by John Hanco*ck Personal Financial Services, LLC (“JHPFS”), an SEC registered investment adviser. Investments: not FDIC insured– No Bank Guarantee – May Lose Value. Investing involves risk, including loss of principal, and past performance does not guarantee future results. Diversified portfolios and asset allocation do not guarantee profit or protect against loss. Nothing on this site should be construed to be an offer, solicitation of an offer, or recommendation to buy or sell any security. Before investing, consider your investment objectives and JHPFS’s fees. JHPFS does not provide legal or tax advice and investors should consult with their personal legal and tax advisors prior to purchasing a financial plan or making any investment.
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