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Your Retirement Income: How to Help Make It Last
March 12, 2018
First, the good news: We're living longer. According to a 2017 Society of Actuaries study, expected longevity for men and women at age 65 has jumped more than 10% since 2000. Men now live to an average age of 86.6, and women to 88.8.
Now the bad news: We're living longer.
That means you'll need more money to cover basic retirement expenses – housing, transportation, health care, taxes and the like. And that doesn't include the costs of, say, hobbies and travel.
In fact, 69% of Baby Boomers don't believe or don't know if they have enough money to live comfortably to age 85.1
Do you have enough for retirement?
There's no hard-and-fast rule for how much you will need. Some say you'll need 80% of your annual preretirement income to live comfortably. Others say $1 million is the magic number.
In reality, the amount you'll need depends on your specific needs, goals and lifestyle.
All that said, there's one fact you can count on: You will need plenty of savings on hand.
Why? Social Security likely won't cover all of your expenses. And with pension plans quickly going extinct, you'll need to lock in other sources of income you can count on – and that will last.
Make your retirement money last
Take time to explore your options. Again, there's no one-size-fits-all solution. It's about you – and the values you want to live out in retirement.
Here are a few possibilities to consider:
Keep working, at least part time.
While not everyone has this option, it could be a valuable way to stay engaged in activities you enjoy – and maintain a source of income at the same time.
Plus, if you're at full retirement age, you're free to earn as much as you want and still receive your full Social Security benefits.
Be smart about Social Security.
It's important to consider the best approach for you. Yes, everyone is eligible to take it at age 62, but there are benefits to delaying.
According to Social Security.gov, for each year past full retirement age (a number that depends on the year you were born) that you hold off (up to age 70), you can receive 8% more income per month than you would if you started withdrawing at age 62.
Pay down debt before you retire.
It's no secret that debt can put a dent in your retirement plans. Think about this: Three in 10 middle-income boomers say that they devote more than 40% of their monthly income to debt.1 And according to the Federal Reserve, 41% of homeowners age 65 or older still had a mortgage on their primary residence in 2016 (compared to 21% in 1989).2
Chances are you've heard of them. While there is a range of different types, the core idea behind annuities is straightforward: You pay a premium to an insurance provider. Later, the insurer pays you a set amount of money each month3 – in some cases for the rest of your life.
Get started with your retirement strategy
Not sure where to start? They key is finding the right mix of tactics to provide what you'll need, when you'll need it.
The best-designed strategies will balance your need to have accessible income both in the short term and the long term. They'll also incorporate investment and tax considerations that can maximize your monthly and yearly income.
Sound complicated? It can be. That's where a financial representative can offer guidance. He or she can help you sort out the variety of options and weave them into a retirement strategy that works for your situation.
What's most important is that you start laying out that strategy – and perhaps start working with a financial representative – as soon as possible.
Doing so will give you time to assess how much money you need and how savings, investments, Social Security and other options can work together to help provide the necessary income for your lifestyle.
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1 Bankers Life Center for a Secure Retirement, “Paying for the New Retirement: Responsibilities and Challenges for Middle-Income Boomers,” 2016.
2 Urban Institute, "What the 2016 Survey of Consumer Finances Tells us About Senior Homeowners," November 2017
3 Occurs once the annuity annuitizes or an income rider is activated.
Thrivent Financial and its respective associates and employees have general knowledge of the Social Security tenets; however, they do not have the professional expertise for a complete discussion of the details of your specific situation. For additional information, contact your local Social Security Administration office.
THRIVENT FINANCIAL IS THE MARKETING NAME FOR THRIVENT FINANCIAL FOR LUTHERANS. Insurance products issued or offered by Thrivent Financial for Lutherans, Appleton WI. Not all products are available in all states. Thrivent Financial representatives are licensed insurance agents/ producers of Thrivent.