Tag: retirement planning

If you’re an entrepreneur, you know the importance of saving money. Everyone should follow specific steps to save and maximize their assets before retirement. There are small things you can do when you’re young that can have a significant impact on your finances later in life. In this article, we’ll go over some of the critical first steps you should take to start saving money.

Key Takeaways

• Creating a budget is one of the most essential steps to saving money. Categorizing your spending into essentials and recreational purchases can be eye-opening about how you use your money.
• The process of opening a retirement account takes some research beforehand. Learn the differences between a traditional IRA and 401(k), particularly how they’re taxed.
• Automating your savings saves you time and ensures you continually add money to your retirement account.

Set Financial Goals

The first step you should take when planning to save money for retirement is outlining your goals and timeline.

How old are you? If you’re in your teens or early 20s, you should first pat yourself on the back for being so financially responsible at a young age. You’ve got a long time horizon, meaning you can make riskier investment decisions (investing in stocks, for example) that will hopefully give you an excellent yield over time.

If you want to retire young and move into a house in Beverly Hills, you must adjust your saving and spending habits to be a bit more stringent. If you don’t mind working until you’re closer to 60 or 70 and want to live in the woods in a small cabin, your saving habits can have more breathing room.

Specific goals will help you create a savings plan tailored to your needs. Your goal shouldn’t be as abstract as “I want to be rich and retire early.” Get specific with your numbers. Research how much your dream house costs right now.

Even though inflation will push the price of the home higher by the time you’re ready to buy it, having the specific number will help you make more concrete plans.

Create a Budget

Next, you should develop a comprehensive budget outlining your income, expenses, and savings targets. This could be as simple as printing out a copy of your debit card history and going through all your purchases in the most recent month.

Since you’re an entrepreneur, try to be mindful of both your personal and business expenses, keeping track of how much money you’re directing into your company. Looking at your transaction history can be eye-opening for many of us, as it forces us to consider what we spend on regularly and maybe what we spend too much on.

Dividing transactions into essential purchases and inessential purchases is another way of gauging your minimum monthly budget (the lowest amount of money you need to survive comfortably).

That “comfortably” is ambiguous enough to cover a wide range of spending habits. The point is not to spend as little as possible but to know how much money you want to spend each month. This will help you better allocate funds toward retirement savings.

When picking a goal, it’s crucial to have a specific number and a specific timeline in mind. It can be challenging to choose that number if you’re young and aren’t totally sure where you hope to be at retirement age. In that case, picking a specific number can still be helpful as it will force you to be more mindful of your spending habits and progress toward your goals.

Establish an Emergency Fund

Less than half of people in the US say they’d be able to cover an unexpected $1,000 expense. This is alarming and should make the need for an emergency fund clear.

As an entrepreneur, it’s important to have a safety net to cover unexpected expenses and business setbacks. It’s almost guaranteed there will be months you perform worse than expected, face fees or licensing costs, or need to invest more to keep up with the competition.

Set aside a portion of your income to build an emergency fund that can cover at least three to six months’ worth of living expenses. That way, no matter what happens, you’ll give yourself breathing room to adjust and take actions to get back on track.

Having this fund in place will prevent you from dipping into your retirement savings during challenging times.

Open a Retirement Account

The next thing you should do is research different retirement account options available to entrepreneurs, such as a Simplified Employee Pension Individual Retirement Account (SEP IRA), a Solo 401(k), or a Simplified Employee Pension Plan (SEP).

An SEP IRA is like a traditional IRA that can receive employer contributions. One benefit of an SEP IRA compared to a traditional IRA is that the annual contribution limit is much higher on the former. SEP IRAs typically have lower administrative costs as well, and they only come in pretax versions.

A solo 401(k) is traditionally funded with pretax money, meaning contributions are made before municipal and federal taxes are withheld. However, you can also set-up a Roth solo 401(k) funded with after-tax contributions. Solo 401(k)s often allow you to save money at a faster rate, making them a good option for single entrepreneurs.

Choose the account that best suits your business structure and financial situation, and open it as soon as possible to start accumulating tax-advantaged retirement savings.

Automate Your Savings

Be sure to take advantage of automation tools provided by your bank or retirement account provider. Automation tools can move money directly from a deposit into a savings account, ensuring you consistently save money.

Set up automatic transfers or contributions from your business earnings to your retirement account. By automating your savings, you’ll ensure consistency and make it easier to stay on track with your retirement goals.

Most bank accounts offer some form of automated transfer at this point, and if you’re unsure whether your bank does, you can always visit their website or call an agent to ask.

Many financial advisors say 20% of your paycheck should go toward savings, with 50% going toward necessities and the remaining 30% going toward discretionary items. If you make $5,000 per month, that means $2,500 should be going toward essentials, $1,500 can go toward discretionary items, and the remaining $1,000 should be automatically deposited into savings.

Maximize Contributions

Retirement accounts come with certain limits to how much you can deposit into them each year. This ensures that higher-paying workers can’t take advantage of certain tax advantages.

It’s usually a good idea to contribute the maximum allowable amount to your retirement account each year. Consult with a financial advisor to understand the contribution limits and tax benefits associated with your chosen retirement account.

By maximizing your contributions, you’ll benefit from tax advantages and potentially grow your retirement savings faster.

Diversify Your Investments

Once you have funds in your retirement account, diversify your investments to manage risk effectively. Consult with a financial advisor or investment professional to develop a diversified portfolio that aligns with your risk tolerance and long-term goals.

Remember to rearrange your portfolio as you age to ensure you’re protecting assets when you need them more. This is known as rebalancing your asset mix. Having a majority of your money invested in stocks or a speculative asset like crypto isn’t as smart the older you get. You’ll want to look into products like deposit certificates and treasury securities with lower risk.

In today’s artificial intelligence world, more AI-assisted investing products can help rearrange your portfolio automatically to respond to current events. Watching stock movement every day isn’t feasible for many people, so taking advantage of new technology may be an intelligent choice for you.

Regularly review and rebalance your portfolio as needed to ensure it remains in line with your retirement objectives.

Remember that certain investments are better to make depending on the state of the economy. Many economists are predicting the US will enter a recession later in 2023. During a recession, utility companies, discount retail stores, and grocery stores tend to be better investments, since they’re essential services people will continue to spend money on even when times are tough.

The Bottom Line

Entrepreneurs should take specific steps to protect their money and prepare for retirement. Some of these steps include making a budget, tracking your spending habits, setting up a retirement account and automatic contributions, maximizing your contributions, and diversifying your portfolio regularly.

We’re living in a year of exceptionally high inflation and economic uncertainty. With many people unable to build a robust emergency fund or make regular contributions to a retirement account, the need to start taking these steps early in life has never been more apparent.

The post First Steps to Save For Retirement for Entrepreneurs appeared first on Due.

An increasing number of people are stepping away from traditional employment and choosing to work as freelancers. The appeal of flexible hours, being your own boss, and having more creative control over your work is undeniable. But with these advantages come specific serious challenges.

Unlike people with more traditional employment structures, freelancers don’t have the luxury of an employer-sponsored 401(k). Instead, they take on more of the responsibility for their retirement planning. And as someone self-employed, you’re already burdened with extra financial considerations. It can therefore be tempting to put saving for retirement on the back-burner.

In this article, we’ll explore different savings options available to freelancers, and offer advice on starting with them today. The critical thing to remember is that it’s never too soon to start planning for retirement. Take the time to invest today so your life when you’re older can be easier.

The Importance of Retirement Savings

Aging is a natural and inescapable fact of life. And the older you get, the less hours you’ll likely want to work. In 2023, the average monthly Social Security benefit for retired works was $1,825. That likely isn’t enough for you to live on – most elderly individuals get only 30% of their income from Social Security.

This is one of the reasons having a personal retirement savings plan is important to many. It can also be a comfort knowing your retirement planning is in your hands, and not dependent on public policy.

As scary as the idea is, it’s possible for the elderly to run out of money in retirement. Planning for retirement by saving money ahead of time is a key step of ensuring you remain comfortable and financially stable in old age.

According to a 2023 Social Security Administration report, the average life expectancy for 65-year-olds in 1940 was almost 14 years. That number has since increased to over 20 years. People need to find ways to make their money last longer. That’s where savvy investing comes in.

The Unique Challenges Freelancers Face

Self-employed people already face many challenges related to their finances. The most obvious is dealing with an irregular income stream. There are months as a freelancer that you’ll make less than you anticipated, and you’ll be surprised to make more than you expected. Learning how to react to both situations is essential to managing your money responsibly.

If you make less money than expected in one month, it may be worth keeping your retirement savings contribution consistent and trying to take the financial hit elsewhere. Dropping a streaming service or having one less dinner with your significant other may be the better choice in the long run, as you’ll force yourself to stay regular with your retirement investments.

If you have an unexpected boost in income for one month, you’ll be faced with a decision. Should you spend the extra money on a discretionary purchase? Or should you increase your savings contribution that month?

Often, setting up automatic withdrawals from your checking account so a fixed amount of your paycheck goes into savings each month is a good choice. For example, it protects you from forgetting or choosing to invest less if you lose a client, which can lead to bad habits.

Another challenge freelancers face is the lack of employer-sponsored retirement plans. Employees of more traditional companies often have options like a 401(k), sometimes with deposit matching or a stock option to boost savings. Freelancers don’t have these options, meaning they have to organize and fund their own retirement savings plan.

Taking initiative is often the bigget obstacle to freelancers starting their savings journey. If you’re self-employed, reading this article is hopefully a first step to learning more about your options.

Retirement Savings Options for Freelancers

If you’re a freelancer, you still have options for tax-deferred retirement savings plans similar to those of employees of traditional companies. Here are some of those options.

Simplified Employee Pension (SEP)

An SEP plan is available to businesses of any size and allows employers to contribute to traditional IRAs for their employees. A SEP often comes with fewer start-up and operating costs than a traditional retirement plan.

SEP plans only allows for employer contributions. Businesses with more than one employee may choose a SEP plan because it allows for flexibility in the annual contribution. If you anticipate your business will have years of profits followed by years of losses, a SEP plan may be a good choice, as it allows you to change how much you contribute (though the amount must be consistent between employees).

For the purposes of a freelancer, a SEP plan allows contributions of up to 25% of your net earnings from self-employment. In 2023, the limit to contributions was $66,000.

You can set-up a Simplified Employee Pension by completing form 5305-SEP.

Solo 401(k)

A solo 401(k) gives you the unique advantage of being able to contribute to your savings account as both an employer and employee. As an employee, you get salary deferrals up to 100% of your compensation (with a limit of $22,500 in 2023).

As an employer, you can contribute up to 25% of your net earnings from self-employment, with a limit of $66,000 in 2023. The latter are called employer nonelective contributions.

These plans come with “catch-up contributions” of $7,500 for people over the age of 50. Also, the plan works on a “per person” basis, meaning you won’t be able to enjoy extra contributions if you have more than one employer. Other names for this plan include one-participant 401(k), Uni(k), and Solo(k).

SIMPLE IRA

A Savings Incentive Match Plan for Employees (SIMPLE) is another option for freelancers. This plan allowed for contributions of up to $15,500 in 2023 – a lower limit than the 401(k) and SEP plans. Contributions to a SIMPLE IRA are tax-deductible, and distributions during retirement are subject to taxes.

Similar to the 401(k), people over the age of 50 with a SIMPLE plan can contribute additional amounts, though it’s only $3,500 with the SIMPLE. To set up this kind of plan, you can fill out form 5305-SIMPLE or 5304-SIMPLE.

Defined Benefit Plan

The more traditional pension plan remains popular with a lot of people. A defined benefit plan comes with a stated annual benefit you’ll receive at retirement. In 2023, the maximum annual benefit was $265,000. Contributions are tax-deductible, and the benefits you receive after retiring will be tax-liable.

The main drawback of this kind of plan is how expensive it is. Defined benefit plans typically come with high start-up and maintenance costs. An actuary has to decide your deduction limit, which adds administrative costs.

Tips and Strategies for Successful Retirement Savings

There are a number of tips and tricks you can follow to help yourself save for a successful retirement. One of the first tips we’d recommend is creating a budget for yourself. Track your expenses, both business and personal, to better understand how you’re spending your money. Once you know where your money is going, you’ll be better able to gauge where you can save and where you need to keep investing.

Another tip we’d recommend following is automating contributions to your retirement savings account. If you automate your checking account to move part of your paycheck into a savings account regularly, you save yourself the time and effort of making manual contributions. As we said, the need to take the initiative often stands in the way of freelancers saving for retirement. Automating your savings will make it much more likely that you keep saving consistently.

A third tip to follow – one you should try following before the first two – is setting clear objectives for yourself. When do you want to retire? How much money do you want to have roughly? If you can have clear, tangible goals for yourself, you can adjust your savings strategy better to meet your needs.

Conclusion

Saving for retirement is an essential part of planning for your future. No one wants to run out of money when they’re old, so start by setting financial goals and budgeting to see where your money goes every month. Once you’ve done that, choose a retirement savings plan that’s right for you.

Freelancers face unique challenges when it comes to retirement savings as they have to take the initiative to set-up plans and contributions for themselves. Luckily, there are some savings plans available to freelancers, including solo 401(k)s, SEPs, and SIMPLE IRAs. Learn about the different contribution limits and administrative fees associated with these plans to pick which one is best for you.

Once you’ve picked your plan, automate your contributions and always try to make the maximum contribution every month.

The post Navigating Retirement Savings as a Freelancer: A Comprehensive Guide appeared first on Due.

There’s been a lot of press in the last year dedicated to asking whether or not we’re in a recession. Because the National Bureau of Economic Research (NBER) calls recessions retroactively, we could be living in one now and not realize it. Many experts still maintain that a recession will be announced in 2023, though we have yet to see how severe it will be. 

If your employer gives you access to a 401(k) – a defined-contribution retirement savings plan – you may wonder how a recession should change your contributions. Should you slow down on your contributions? Invest more? Or make your investments more conservative?  

Here are some key things to consider when managing your 401(k) through a recession. 

Key Takeaways

• Recessions don’t necessarily coincide with bear markets, though bear markets present a unique growth opportunity for investors. 
• Investing through a recession or a bear market highly depends on your time horizon. 
• Long-term investors can find relief in the fact the market has always rebounded from recessions, reaching even greater market highs over more extended periods.

What Happens to Stocks During a Recession?

The stock market is not the economy. Just because you’re sitting in the middle of a bear market doesn’t necessarily mean you’re also in the middle of a recession. But in many cases, the two do coincide. 

Historically, when the stock market has decreased during a recession, it has always rebounded and gone on to achieve new highs. For example, during the last recession in early 2020, the S&P 500 hit a low of 2,304.92. On Oct. 7, 2022, even in its downward slump compared to the end of 2021, the S&P 500 sat at 3,639.66 – up compared to its February 2020 high of 3,380.16.

That means if you’re a long-term investor, you shouldn’t count the temporary low as a loss – the long-term value of your investments is highly likely to go up as long as you don’t cash out.

2022 was a particularly rough year for the stock market, with the Russian invasion of Ukraine causing global uncertainty and high inflation leading the Federal Reserve to institute a series of aggressive rate hikes. The downward pressure hurt corporate profits, many tech companies laid off employees, and discretionary spending decreased generally. 

Right now, it’s unclear if we’re in a recession, but markets have been on a slow march upward in recent months. After a relatively volatile March, mainly due to the collapse of Silicon Valley Bank, experts are hopeful markets can continue to improve in April.  

Defensive and Dividend Stocks

Many financial advisors recommend looking into dividend stocks if you’re a retiree looking for passive income. Dividend stocks produce cash flow, which can replace your income once you retire. 

Bonds are popular options for investment because they offer regular interest payments and don’t fluctuate as much during volatile economic times. Dividend stocks provide similar benefits in that they can produce steady income but are still subject to market volatility. 

Learning about defensive stocks can be another strategy for investors planning for retirement. Some stocks like utility companies, grocery chains, and discount retailers won’t be as affected by market volatility. 

Evaluate Your Time Horizon

Time horizon is the amount of time you need to reach your financial goals. When you’re younger, you tend to have a longer time horizon with your 401(k). There are years, possibly decades before you’ll need to withdraw any money. As you age, your time horizon gets inherently shorter as retirement draws near, and you will need to liquidate your assets to continue living. 

20+ years until retirement

If you invest over a longer time horizon, you can view market downturns as a generally good time to invest. This is because stock prices typically decrease, allowing you to buy in cheaply. 

While the market may go down further, there are high odds it will recover and then some by the time you need to access your investments in retirement. 

The adage tends to be true: more time in the market tends to beat trying to time the market. That’s why one of the wisest ways to invest is dollar cost averaging, investing a fixed dollar amount in steady increments over a long period. 

10 to 20 years until retirement

If you have ten to twenty years until retirement, you’re more likely to want a mix in your asset allocation. Maybe half or a little more than half of your portfolio is made up of stocks, which are higher risk but also offer the potential of higher returns. 

You could allocate the remaining portion of your portfolio towards more conservative investments, like bonds. Some investments, like target date funds, make these allocation changes automatically for you as you age.

Less than a decade until retirement until retirement

As you move towards retirement, it’s generally a good idea to make your portfolio more conservative. You can do this by putting a more significant proportion of your investments into shorter-term bonds and high-grade bonds, which tend to be less volatile than stocks. 

Most people will want to aim for ample cash reserves at retirement. It is a smart idea to do some income planning to decide where you will get your income at retirement. For example, if you have a Roth IRA, a 401(k), social security, and cash reserves, which source of income does it make sense to draw from first?  

For example, one advantage of delaying drawing from social security is that the longer you wait to claim social security, the higher your monthly benefit will be. If you can rely on your 401(k) before you turn 70 – the age at which your social security benefits reach their maximum – you can earn more income later in life. 

Investing During a Recession

One of the surest ways to successfully save for retirement is putting away at least 10%-15% of your income throughout your career. Make those contributions directly via paycheck deductions to ensure you don’t get cold feet about investing when the market is down. 

If you are sitting on some extra cash and wondering if a recession is a good time to invest, the answer is usually “yes.” When the stock market dips down, that dip has never historically been permanent. Over a longer time horizon, your investment’s value will likely increase. 

However, waiting for the market bottom is rarely a good idea, as this point is difficult to predict accurately. You could hold onto your cash for too long before investing and then buy as stocks are on the rise again, losing the gains you would have incurred had you put your money in earlier.

Rather than trying to time the market, consider contributing at least 10% -15 % to your 401(k). Remember that one of the most significant benefits of having a 401(k) is reducing your taxable income whenever you move money from your paycheck into that account. Because the US uses a progressive tax system, less taxable income means you pay fewer taxes. 

401(k) vs. Roth IRA 

When planning for retirement, you must decide what kind of tax-advantaged account you want to use. 

A Roth IRA is an individual retirement account you can set up with a bank or other financial institution. You fund a Roth IRA with after-tax money, meaning you can’t deduct contributions from your taxable income before retirement. Instead, you don’t have to pay taxes on the money you withdraw from your Roth IRA after retirement. 

You fund a traditional IRA with pre-tax money, like a 401(k). You deduct contributions toward a traditional IRA from your taxable income and pay taxes on the money after retirement. 

The most significant difference between a Roth IRA and 401(k) is that the latter is employer-sponsored. This means you don’t have to be as hands-on with your account, and that eligibility depends on whether your employer offers this savings option. 

A Roth IRA is a handy option for people who think they’ll be in a higher tax bracket after retirement. This is because Roth IRAs are funded with after-tax money, meaning your withdrawals were already subject to taxation. However, Roth and traditional IRAs typically have lower contribution limits than 401(k)s. 

Lower-Risk Places to Hold Your Cash

If you’re inching closer to retirement, you may want to move more of your assets into more conservative investments like: 

• CDs
• Short-term bonds
• Money market funds
• Treasury bills

Only some of these vehicles are immediately liquid, but they are a safer space to stash your cash than the stock market. 

Remember that those with longer time horizons don’t necessarily need more conservative investments – even in a recession. Time is on your side, so the stocks you’re investing in have longer to recover and grow. 

The Bottom Line

Hopefully, you started investing young to give yourself an adequate time horizon to take on risks. If you did, a recession wouldn’t necessarily upend your game plan. 

Those with longer time horizons can usually afford to take on riskier stocks, even in a bear market. When you have 10 or 20 years left until retirement, you typically want to start making your portfolio more conservative but maintain enough risk to enable further growth. 

Suppose retirement is less than a decade away. In that case, you’ll probably want your investments to be much more conservative overall, and you may even start strategizing how to move them into cash reserves.

The post What to Do with Your 401(k) During a Recession? appeared first on Due.

 Social Security benefits will eventually be paid to the majority of American workers. It may be possible to qualify for bigger Social Security payments and avoid payment reductions and withholdings if you understand how the system works.

Still. when workers reach retirement age, they often have many questions regarding Social Security benefits — especially when there is so much confusion and misinformation regarding Social Security.

With these ten books, you can debunk these myths and make sure your retirement plan includes Social Security.

Specifically, this book focuses on Social Security and on ensuring that the deserving get the benefits they deserve. Since this book appeared on the New York Times Bestsellers list, we think this is a topic people want to learn more about.

The authors of this book are all experts in Social Security. There is a lot of detail in the book, but the style is conversational. Chapters 16 and 17 are the highlights of this book. You’ll learn the 50 “Good News Secrets to Boosting Your Lifetime Benefits,” as well as” 50 Bad News Gatchas” which can permanently reduce them. It’s easy to see why the purchase of the book would be worthwhile for these two chapters alone.

Mike Piper is a CPA and author of several personal finance books. However, this happens to be one of the most intriguing, fascinating, and informative books about Social Security.

The book explains how to claim Social Security retirement benefits at the right time and provides a comprehensive explanation of the retirement benefits available.

Why’s that so important?

In terms of society’s image, Social Security benefits are crucial. The Social Security Administration has found that about half of the population aged 65 and older live in households that receive at least 50 percent of their family income from Social Security benefits and about 25 percent of those households receive at least 90 percent of their income from Social Security benefits.

Overall, everything you need to know about Social Security benefits is in Social Security made simple. Among the topics covered are divorced spouses’ Social Security benefits, children’s benefits, the earnings limit and the windfall elimination provision for non-SS workers, and the government pension offset for non-SS workers.

In the fourth edition of A Social Security Owner’s Manual, the benefits of Social Security are stressed. After all, more and more people are interested in knowing how to maximize their Social Security benefits.

Specifically, financial advisor Jim Blankenship explains how readers can calculate the level of their benefit. In addition, he discusses how the spouse of the recipient receives the benefits. He also goes over how these benefits can be further enhanced by adding on to them.

Having worked for the Social Security Administration and as a syndicated columnist for Creators Syndicate for nearly 50 years, Tom Margenau is definitely an expert when it comes to Social Security.

It’s a comprehensive book that explains in plain English the various aspects of Social Security, despite its short length of only about 100 pages. As such, it’s perfect for anyone looking for an introduction to Social Security. It explains the history of Social Security and explains what options are available to you even at the age of 62 or (in some cases) earlier. In addition, it discusses options for widows and widowers, as well as divorcees.

The best thing about the Dummies series? Complex topics are explained in an easy-to-understand manner by the authors.

Social Security

The entire book is chock-full of useful information, but Chapter 15, the first chapter in Part 5, debunks the myths surrounding Social Security. Throughout Chapter 16, young people are referred to as stakeholders in Social Security and should keep an eye on the policy changes in the coming years. Lastly, Chapter 17 discusses how Social Security will have to adapt to the realities of the future.

As a financial planner, Devin Carroll is passionate about simplifying retirement planning. His straightforward and condensed guide to Social Security’s jargon is the perfect guide to explain the confusing Social Security System.

That’s important since in order to fully understand Social Security regulations, you must understand the norms and regulations. As such, it’s good to see that this book covers nine essential points about Social Security, as the title suggests. No matter if you are looking for information about benefits, rules, options, or effects of Social Security, you will find these points useful. Keeping these points in mind is critical to keeping social activities running smoothly.

There are a lot of myths and misstatements about Social Security floating around the Internet, in emails, and on websites. Thankfully, our friend Tom Margenau has spent the last half-century dispelling these myths.

The result is an easy-to-understand guide to 100 security myths. His book is divided into two sections, “Political and Myths” and “Program and Practical Myths.” He even has sections on the Supplement Social Security Income Program and Medicare.

Social Security Works President Nancy Altman delivers her third book, which debunks myths and reveals the truth about our nation’s most popular and successful government program using the founder’s own words.

Altman draws heavily on primary sources, such as speeches and published remarks by those who were part of the Social Security Insurance Act at its inception. It may be interesting to some readers to learn that FDR originally intended to push for national health care, but was resisted by the AMA. Throughout this book, it becomes clear that Social Security remains a work in progress and its original purpose is not yet fulfilled.

As you plan for retirement, you may have heard that you’ll require multiple income sources to live a comfortable retirement. You can, however, learn some key insights about retirement in this book and reduce the media’s fear about retirement.

Certified Financial Planner Josh Scandlen argues that you don’t need millions to retire. In particular, this holds true if your mortgage has been paid off since this is the biggest expense in your life. As a result, your lifestyle will be okay financially as long as you are comfortable with it and don’t expect to make many changes.

Specifically, the $214,000 mistake benefits married couples who are in their 60s or 70s to receive better Social Security benefits. Since approximately 97% of those who deserve Social Security benefits do not receive them, this is a must-read for pretty much everyone.

Using a critical tone, the author James Lange, CPA, Attorney, and Financial Advisor, question the delay in claiming Social Security benefits, modifies the benefits, and increases the spouse’s security benefits. Using simple examples and uncomplicated language, you’ll learn how to put proven strategies in place so married couples don’t lose hundreds of thousands of dollars. In addition, Lange describes how to combine optimal Roth IRA conversion strategies with the best Social Security strategies.

FAQs

What Is Social Security?

To provide retirement income to certain U.S. workers, the Social Security program was established in 1935. Eventually, it covered most of the workforce in the country. Americans rely on this financial lifeline to stay afloat in their golden years.

Social Security accounts for at least 50% of the income of 37% of elderly men and 42% of elderly women. Approximately 12% of elderly men and 15% of elderly women earn at least 90% of their income from Social Security.

What is the Social Security retirement age?

It depends on your birth year when you can claim your full Social Security benefit. The full retirement age is 65 for people who were born in 1937 or earlier, 66 for baby boomers born between 1943 and 1954, and 67 for people born after 1960. There are even more specific retirement age requirements for those born between 1938 and 1942, as well as 1955 and 1959. A person born in 1942 will be able to retire at 65, 10 months, while a boomer born in 1956 will be 66, 4 months.

Delaying claiming Social Security until 70 can increase your benefits while those who sign up between 62 and full retirement age receive smaller monthly payments.

If you delay taking Social Security up until age 70, your benefit increases by 8% every year if you delay taking it from the time you reach full retirement age.

What is the best time to start collecting Social Security benefits?

A person can begin receiving Social Security benefits at the age of 62, though the amount will be smaller than if they wait. Waiting until full retirement age (67 for those born in 1960 or later) will allow you to collect more money, but over a shorter period of time. The situation of each individual varies, however. The Social Security Administration notes that “there’s not a single ‘best age’ and, in the end, it’s your choice.”

Consider these questions when:

• What is your ideal retirement age?
• Do you have enough money to retire?

It is critical to consider your lifestyle, health, life expectancy, and where you will live in retirement. This is when determining when you can retire. Your 401(k) contributions and retirement savings also play a role. Also consider other sources of income you might have in retirement, such as a part-time job, annuity, or pension.

Do I have to pay a certain amount?

As of 2023, workers will pay 6.2% of their income into Social Security up to $160,200. Another 6.2% is contributed by employers. The self-employed are responsible for both portions, which is 12.4%.

What is the amount I can expect?

Social Security benefits are based on your lifetime earnings. There is a formula that averages your 35 highest-earning years, but it is quite complicated. If you already have 40 Social Security credits, you can estimate your retirement benefits online.

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