Navigating "to and through" the journey of retirement
9:42 AM, Oct 01, 2018
Retirement age comes for everyone eventually, but not everyone will feel prepared for it when the time comes. Many people worry about how much to save or whether it's too late to start saving. They worry about knowing how and when to start withdrawing their money and what kinds of accounts they should invest in.
Some of these questions have easy answers, and others require more finesse, which is why working with a financial advisor can be an important part of the retirement planning process. But in the meantime, here's are some common guidelines and factors to consider.
When possible, you should begin saving for retirement as soon as you start working. A general rule of thumb is to save 10 to 15 percent of your income per year starting at age 25. You can also invest in more stocks or other higher-risk portfolio options at an early age when you have a long retirement horizon to weather possible variations in the stock market.
You can begin saving for retirement at any age, but you'll need to save more each month if you start later in life. The exact amount you'll need will depend on your lifestyle, the amount of social security or pension you'll be drawing from and whether you're single or married.
At the same time you're saving for retirement, it's a good idea to put money away in a more liquid type of savings account for emergencies. Withdrawing money from a retirement account before age 59 1/2 can earn you an extra 10 percent tax.
Apply for Social Security at the right time
Those who have reached or are nearing 62 should think about when to apply for Social Security. The minimum age to begin collecting it is 62, but you won't receive 100 percent of what you're qualified for until 66 (or 67, depending on your birth year), so waiting a few extra years will net you bigger returns in the long run.
You may even choose to defer applying until age 70, as each year you delay past your full retirement age will net you an 8 percent boost in benefits each year. Don't bother delaying past age 70, though, as you'll see no further increase in your benefits and you'll only lose out on the money you're owed.