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I have a pension worth between $1.5 million and $2 million, depending on how long my wife and I live. When I die it will be passed on to her and she is 6 years younger. I am still working part-time and my annual income is approximately 7.5 million yen. I plan to retire when she reaches full retirement age in a year and a half. I have zero debt and a new car, so I don’t expect any major expenses for the next few years.
The investment portfolio I manage is approximately $975,000 in value and includes moderately high-risk investments with an asset allocation of 90% stocks and 10% bonds. I’m debating withdrawing Social Security at FRA and investing some of it, rather than waiting to withdraw Social Security until age 70. You can also increase your benefits by withdrawing a portion of your investments rather than Social Security.
Although I don’t live a luxurious life, I enjoy traveling domestically and internationally once a year. After retirement, if he receives Social Security benefits and deducts 3% annually from his investment income, he expects to have an annual income of $100,000. My wife says she will retire in three years and will probably collect Social Security at that time.
What are your thoughts on retirement strategy?
look: I am 56 years old and have assets of $3.4 million. I’m semi-retired, but my 64-year-old spouse has no savings. How can we move forward?
Have questions about your retirement savings? Email us at HelpMeRetire@marketwatch.com
Dear readers
You are in a great position for retirement and deserve all the credit.
It’s great to be able to plan for retirement in such detail. Not everyone considers the balance between Social Security and retirement plan distributions, but it’s because many people have to claim Social Security earlier than Full Retirement Age (FRA) to cover their living expenses. It may be from. That being said, a lot of it comes down to running a large number of projections.
Unfortunately, we don’t have a crystal ball, but we can make some informed calculations. Let’s start with Social Security benefits.
As you probably already know, you can get a good estimate of your benefits at FRA and at age 70 from the Social Security Administration itself. There will also be cost of living adjustments in the coming years. However, if you know the basic numbers, you can use it as a benchmark when comparing what you want in an investment.
Break-even point analysis
Now, let’s do a simple break-even analysis. In this example, if you start at age 67, you’ll be $64,800 better off than if you started at age 70 (3 years of monthly benefits). If you divide this number by the monthly excess profit from delay ($432 per month), you find that it will take 12.5 years to break even. Of course, a break-even analysis doesn’t take COLA or other factors into account, but it does give you an idea of when your delayed benefits will exceed the benefits you’d get if you decided to take them early. You can use this to compare it to your expected life expectancy. This is another determining factor in choosing when to claim Social Security benefits.
Other things to consider when delaying Social Security benefits: I don’t like to use the word “guaranteed” in retirement planning, but with Social Security, you can expect to be protected from inflation. While recent years have seen little to no COLA, and other years have seen even larger increases, the significant increase from year to year will of course vary, but it is more certain than the return on investment. . Unstable from year to year.
The postponement will also benefit the wife. If you die first, you may receive more survivor benefits because your retirement benefits will be delayed.
However, if you claim Social Security at FRA without delay, your retirement account will remain the same and grow over time.
back to basics
It’s a good idea to go back to basics, consider what you actually need for retirement income, and prepare yourself for a variety of scenarios that combine different Social Security claiming ages with distributions from pensions and investments. . Keep in mind the impact of taxes, investment returns, and inflation rates (on profits as well as expenses). If you want specific numbers, a qualified financial planner can help.
As you approach retirement, you may need to reconsider your asset allocation to be completely immune to market volatility. Retirees need to balance conservative and aggressive assets so that their investments continue to grow, but the amount of their investments is not yet growing. There is a risk of losing a large amount of money in a recession. In that case, a qualified financial planner can help.
All in all, you have something that many others don’t have as you approach retirement: a pension, which gives you incredible flexibility when it comes to adding Social Security and additional investment accounts . It’s great to see you taking your distribution and advocacy strategy seriously. From here on, we’ll get into specifics.
See also: I’m 76 years old and have $73,000 in an investment account that hasn’t grown in two years. Should you abandon the 50/50 strategy?
Reader: Do you have any suggestions for this reader? Add them in the comments below.
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