Many of us don’t realize that social security benefits are calculated based on the highest 35 years of earnings. So if your wages were low the first few years of your working life, consider working longer now to offset those lower earning years and increase your benefit.
Another strategy: Wait as long as you can after you retire to collect your benefits. Even though you can start getting social security benefits at age 62, the longer you wait to start drawing benefits, the more you’ll get each month. Check your annual social security statement or log on to the Social Security web site to view your statement. Merritt suggests checking social security rules and regulations on the Social Security web site, and well as reading Personal Finance for Seniors for Dummies.
Increasingly, working in retirement is becoming commonplace. And it’s a good way to supplement your income (plus stay engaged in your community or profession). In Merritt’s experience, even work that provides an extra $1,000 to $2,000 a month can make a big difference in retirement. Consider going part-time in your current job if you can, or explore jobs that you’ve always been interested in, but didn’t pursue in your career years.
One thing to keep in mind: Income during retirement could lower your benefits. For instance, in 2018, social security benefits could be taxed if you earn more than $45,360 at your full retirement age, and in areas where seniors get a property tax break, you could lose the benefit if you earn over a certain amount.
You know that the older you get, the less risk you should be taking with your investments. But putting too much of your money into “safe” investments like bonds can actually hurt you. “Going conservative too soon may impact the ability to grow assets in retirement and lead to the possibility of running out of savings prematurely,” advises Merritt. Diversification, not just in terms of asset allocation, but also in terms of the types of investments you own, is key. Talk to a qualified financial advisor to assess your personal financial situation to develop a portfolio that works best for you.
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