Make Sure Your Social Security and Pension Payouts Last
Table of Contents
Your transition into retirement is an exciting time. But without proper planning, it can be nerve-racking and even disappointing. Put the effort in ahead of time and make sure your finances are in order. That includes having a plan to ensure your Social Security and pension plan payouts last as long as needed and afford you the opportunity to live life the way you want.
It’s important to know the options available to you when it comes to Social Security and pension planning. Consider these three actions to put yourself on a path to a comfortable retirement and a steady payout stream to sustain your lifestyle.
1. Plan ahead
It's important to know what you want out of retirement. Do you plan to travel? Buy a vacation home? Spend time with family or help pay for grandchildren’s education? To do these things, you need to set clear expectations. These include:
- What will your monthly income needs be?
- What lifestyle do you hope to enjoy?
- What other sources of income can you plan for?
- What is the right strategy for handling long-term care expenses like medical bills and assisted living?
- What support are you planning to provide for your kids?
- What are your spouses’ expectations and are you in agreement?
2. Be informed
There are many possible sources of income after retirement – pensions, retirement accounts, investments, Medicare, etc. Deciding which one fits your situation is crucial.
With pensions, it’s a one-shot deal; the decision you make is the one you’re stuck with once you begin payouts. Do you choose monthly checks or opt for a lump-sum payout? Both options have advantages and disadvantages and you need to decide which suits your circumstance. A financial advisor can help you make the right decision that meets your expectations.
There are important decisions to be made when collecting Social Security, too–the most important being when you choose to retire and begin collecting. You should definitely meet with a Social Security representative. The Social Security department has offices around the nation so schedule an appointment at an office near you. Go in person so you can have a conversation and discuss what you can expect when you retire. Social Security retirement benefits are available as early as age 62, but your benefit is reduced when you start collecting that early. For example, if you turn age 62 in 2024, your benefit will be about 30% less than if you waited until your full retirement age of 67.
3. Work with a planner
There are a lot of factors that can impact a comfortable retirement. You may have assets you don't even think about, and a financial planner can help you make an inventory of them to make sure they are considered while developing a strategy that meets your goals. To make the most efficient use of your time, be sure to bring the following to your meeting:
- Latest tax return, a recent pay stub, and bank account statements
- Investment documents including your employer retirement plan statements, pensions, employer stock grants or options
- Insurance documents such as life, disability and long-term care policies
- Estate and legal documents including wills, trusts, power of attorney and key contacts
If you’re looking for unbiased financial advice (and you should) First Financial Bank's Yellow Cardinal Advisory Group can assist with your retirement planning both qualitatively and quantitatively. Remember, retirement can last as long as your career. You need a plan to make sure the money you’ve saved and receive lasts. With sufficient planning, you can ensure that you have enough support to live out this chapter of your life in the style you’ve dreamed.
