By Brenda W Hargroves
OK, I admit it – I’m retired. So, this article does not focus on saving for retirement tips (see my previous article); it’s geared towards those of us who are there now, regardless of how much we’ve saved and prepared. We are asking ourselves – What do I do now?
I was once told the story of a woman who retired with $25,000 in savings. She lived a full life and still had $25,000 when she died. I’m with her. I envision myself enjoying retirement and still having the same amount of money I started with or more when I leave this Earth.
So, how can I accomplish this goal?
The secret to the fun side of retirement is comparing how much money your income will earn (ROI – Return on Investment) versus how much it will help fulfill your dreams (ROR- Return on Retirement).
Financial advisors will tell you that the number of years most people tend to spend making their dreams real falls into three age categories:
Ages 60-74 are considered your Go-Go Years – These are the years you will spend the most money on your dreams.
Ages 75-84 are your Slow-Go Years – You start to spend less on making your dreams come true.
Ages 85+ are your Won’t-Go Years – You spend even less money on this goal.
During years 60-74, it makes sense to take some risks with your savings in order to get a better rate of return on your retirement funds. Below are a couple of ways to do so.
Social Security
The most popular advice is to hold off drawing Social Security as long as you can to draw the highest monthly amount. I say it depends on your situation. Because I became a widow at an early age, I was eligible to start collecting Social Security at age 60. I did so while I was still working. Sure, I had to pay taxes on the money. But, like my financial advisor once told me, taxes are only a problem if you can’t pay them. I’ve now been collecting Social Security so long that the cumulative amount I’ve received easily outweighs the benefit of waiting to collect at full retirement age or older.
Other situations are worth considering. For example, a woman may find it more financially beneficial to collect her deceased husband’s benefit amount. A divorced woman may be eligible to collect her deceased ex-husband’s benefit if they were married for ten years. Look into your options.
Retirement Savings
Annuities, like every other investment vehicle, have it pros and cons. I like the ones that offer a lifetime guaranteed income rider. Contract holders are guaranteed an annual income for the rest of their life based on the amount of money invested. The guaranteed amount is generally a percentage of your total investment plus compound interest. It makes sense to me to start collecting income to enrich your retirement as soon as you can rather than wait until later.
Rather than putting all of your money in one large CD (Certificate of Deposit), consider opening several smaller ones with staggered maturity dates. As they mature, determine whether you want to use all or part of the money, or simply renew the CD.
Conclusion
Determine the optimal time to start drawing Social Security and manage your retirement fund options wisely. These are my suggested ways to live a full life in retirement and finish rich. I’m sure there are other things we can do. I encourage you to add your suggestions in the comment section.
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