
Retirement Planning
3 Retirement Questions You’ll Need to Address
Retirement today isn’t what it used to be. A new retirement landscape demands a fresh approach to thinking about and planning for retirement.
A comfortable retirement is in the making long before it’s time to retire. Every day you go to work and every penny that you put away lays the foundation for your golden years. At this point, a key component of your retirement plan is to focus on working and saving.
There is no right answer to what the best approach to saving for retirement during your working years is. However, having a strategy, or at least arming yourself with the knowledge of what saving tools exist, doesn’t hurt. That’s why we’re here to give you a lay of the land.
Social Security credits are the building blocks of your benefits. Without enough credits, the Social Security Administration (SSA) has no obligation to deliver your monthly benefit check
So how many credits are enough? For retirement benefits you need 40 credits. At maximum, you can earn 4 credits per year, meaning that 10 years of work could earn you an adequate amount of retirement credits. For every $1,260 (as of 2016) you make and pay towards Social Security taxes, with slight adjustments to for inflation, you earn 1 credit, until you max out your 4 credits per year. These credits stay with you forever regardless of breaks in employment. To figure out where you stand, sign up for My Social Security, and take a look at your statement.
There’s a wealth of information out there regarding where to put your money, so it’s important to break down a few key retirement saving accounts:
When it comes to retirement planning, the big investing question is stocks vs. bonds. The answer is both, but the balance is up to you and depends on how risky you want to be with your money. Bonds are good for safety and stability. They’re a great crutch during rough times, and good for someone who needs cash within the next five years. But retirement is a long-term goal and is growing longer and longer with our increasing life expectancy. Throwing all your money into bills and bonds won’t get you the kind of growth you need. That’s why some (and often a majority) of your money should be invested in stocks. Though the stock market may be unpredictable in the short term, historically it has moved upward in the long term. With the high average return of stocks, that’s where you’ll get the biggest bang for your invested buck over the long-term.
A final source of money to consider in retirement is your home. Investing in real estate and paying off your mortgage before your retire means substantially reduced living expenses in retirement. Plus, the equity in your home is an asset which can generate income, through tools like a reverse mortgage.
Although there is no formulaic answer to what the best way to save for retirement during your working years is, understanding the vehicles out there to save is incredibly valuable. By determining your retirement goals these retirement saving vehicles can be utilized to get you one step closer.
Retirement today isn’t what it used to be. A new retirement landscape demands a fresh approach to thinking about and planning for retirement.
Household spending generally drops at retirement and then continues to decline throughout retirement. Here’s how people’s spending changes the most and how it can effect your saving plan.
Figure out if you've saved enough to support your retirement with Blueprint Income's 'Can I Retire' tool.