Remember Retirement?
Daniel Kresh, CFP?
Helping people turn good incomes into great outcomes | Financial Advisor | Dad of twins | Rotarian
I was asked to answer some questions for a MoneyGeek article on retirement income, read my answers here. The full article is linked at the bottom.
If an older adult was not able to save heavily before retirement, what’s the first tip you recommend for earning income in retirement?
Redefine "retirement." The good news is that you have decades of experience to leverage, and there are more opportunities to work flexibly and part-time from anywhere than ever before. What are your skills or hobbies? You might have real opportunities to do things that don't really feel like work to supplement your income.
Finding ways to continue to earn money can be very powerful in retirement, especially if you can delay taking social security and increase your base for it. Delayed retirement credits, the COLA (Cost of living adjustment) or replacing some lower-earning years could significantly increase the monthly benefit you will receive for the rest of your life.
When you retire, you'll need to figure out how to spend your time. There could be things you can do that don't feel like work, things that you would have never considered your "career," but that can help give your retirement meaning and make it mathematically possible.
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How do you recommend an older adult calculates their life expectancy when financially planning for retirement?
Most people are concerned about running out of money in their old age, so no matter how you calculate it, adding 5–10 years is safer to give yourself a cushion with what you want to plan for. There are tools online, but many variables go into calculating them, like medical history, family history, etc.
Life expectancy increases with age, which surprises many people, so yours could be a bit longer than you think.
You can use the IRS table for RMD calculations as a place to start, this is easy to search for online. Your factor is your life expectancy, and it’s probably longer than you think, and the counterintuitive fact about life expectancy is that it goes up as you age (you can see this in the tables).
It’s also important to consider medical and family history as that can have a huge impact. Averages are useful, but they don’t really mean anything to an individual. When it comes to planning it’s usually better to assume a longer than average life, no one wants to run out of money, if you plan for funding a really long life you decrease the likelihood of that happening.
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Links to this article and more can be found on the "In the News" tab of our new website rememeberretirement.com
https://www.moneygeek.com/financial-planning/income-streams-in-retirement/#expert=dan-kresh