Money
How Social Security and 401(k)s factor into retirement planning
Retirement planning can prove to be a difficult process for many Americans, and many may find that they are depending on their 401(k)s a little more than in years past. If this is the case, you may be wondering whether these funds can sustain the lifestyle you want.
Financial adviser Roger Wohlner suggests in U.S. News & World Report that retirees need as much 70 percent to more than 100 percent of their pre-retirement income during retirement to maintain the same standard of living. However, that doesn't take into account travel expenses. Many active boomers are planning to go on new adventures when they stop working, and that may mean saving even more.
When organizing your finances, make sure to take into account how much you will receive from Social Security benefits. This year, the maximum benefit for a worker retiring at 66 is $2,366 per month.
Bill Hunot, a financial analyst, recently told NewsOK.com that those who can afford to wait to withdraw Social Security may want to delay tapping the fund until age 70. This could net you an extra 21 to 30 percent in benefits. However, retirees should consider adding an extra source of income if they are pressed for money.
"If you're depending upon Social Security for 75 percent or more of your income in retirement, you should plan to continue working as long as you can," he told the website.
Wohlner recommends that, if you have a 401(k) plan, carefully evaluate the fund so that you can understand it completely. Workers often forget about these valuable savings and then overestimate how much they will get when it comes time for withdrawal.
According to Wohlner, you should be contributing as much as you can to a 401(k) and monitor how much your employer is contributing to the account. A typical match is 50 cents, but it could go all the way up to 6 percent of your current income.
Social Security and 401(k) savings are important factors in building your nest egg, but there are other options - more and more retirees are choosing to work part-time or keep a portfolio of active investments. At Del Webb retirement communities such as Sun City Huntley in Huntley, Illinois, investment clubs regularly meet to talk about the latest developments of the markets and also share tips and advice that can help both novice and veteran traders alike.
You might also find these articles interesting.
Affordable Care Act offers boomers considerable benefits - 01/06/2013
Since it was signed into law in 2010, the Affordable Care Act (ACA) - often referred to as Obamacare - has received a great deal of attention.
Fiscal cliff deal includes some good news for boomers - 01/04/2013
When Congress reached a deal to avoid the fiscal cliff, the reaction was generally mixed, but baby boomers heading toward retirement were given some good news.
Any boomer vs. millennial conflict may be overblown - 01/04/2013
It's easy to think there's a rivalry between baby boomers and millennials. The two generations are seemingly at odds on everything from movies to spending habits.
Attitudes toward finances differ between older, younger boomers - 12/21/2012
With 78 million members, the baby boomer generation makes up a large swath of the population, and while it is often viewed as a single entity, a recent study suggests there are considerable differences when it comes to financial planning.
