Planning for retirement can be overwhelming, but with some forward thought and intentional planning, you can optimize your pension to enjoy your golden years! Here are 3 ways seniors can optimize their pension.
Plan Ahead… Far Ahead
Americans are living longer than ever and saving less, leaving them potentially unprepared for the length of their retirement years. Traditional pensions are also becoming less common—according to the Pension Rights Center, only 15% of workers in the private sector have traditional defined-benefit pension plans, even though almost two thirds of Americans think that traditional pension plans do a better job of ensuring retirement security.
Many people are also saving less and aren’t planning ahead. In fact, according to Bloomberg 43% had no workplace savings method of any kind in 2019. A factor contributing to this might be the changes that have occurred to private pension plans. Over the past 20 years, plans that are defined-contribution, like 401(k)s, have become increasingly widespread. These plans don’t have any built-in subsidies for early retirements like defined-benefit plans do with their fixed annual pension benefits.
Unfortunately, many people rely on Social Security to subsidize at least half of their income, even though it was designed to cover only 40% of what people earned. To ensure you have the means to fully enjoy your retirement, you’ll need to be resourceful.
With the decline in traditional pensions and Americans enjoying a longer retirement due to increased lifespan, you may need to get creative to optimize your pension and save for this time.
Many are taking matters into their own hands and choosing to stay in the workforce longer, or diversifying their investments to yield a greater return.
The majority of Americans start using full Social Security benefits when they begin retirement, usually between ages 65-67 depending on which year you were born, but you can start collecting as early as age 62 at a permanently reduced amount.
If possible, wait until you’re 70 to begin collecting Social Security, as that’s when you’ll receive the highest monthly benefits. Less than 4% of Americans actually wait until they’re 70 to start collecting Social Security benefits, even though your payout is increased with every year you wait up until age 70.
Wherever you’re currently at, you can begin to optimize your pension by making the maximum contributions possible and having these important conversations with the right people, including your spouse, family, and a financial advisor.
Talk to a Professional
Consulting with a professional about your financial future can help set you up for success in your golden years. Many in the financial industry have years of experience with the diverse and unique needs of clients to ensure that your best interests are covered.
At Kaplan Development Group, we work hard to create and foster compassionate and loving communities for the individuals in our care. Although planning for retirement may be overwhelming, you can help your loved ones thrive with some simple planning! For more information on our assisted living homes, give us a call at (516) 496-1505 or contact us online.