Why Retiring at 65 Could be a Thing of the Past

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Why Retiring at 65 Could be a Thing of the Past

Raising the retirement age is a sensitive subject. But there are a few rules that clients are advised to follow to improve their financial prospects in retirement.

The Sad Facts

Most workers do not want to be told they have to work longer, but more Americans are working well into their 60s and 70s than in the past — often because they have to. As much as 54% of Americans said they expect to stop working sometime after age 65 or never retire at all, according to a study in this CNBC article. Just 24% of the respondents in the Transamerica Center for Retirement Studies report say they plan to retire at 65, with 22% saying they are eyeing an earlier retirement.

Moreover, more than half of workers — 55% — said they plan to work either part-time or full time in retirement. While most of those respondents cited financial reasons for those plans, many also pointed to other reasons, many related to healthy aging, such as avoiding social isolation.

How to Avoid Working in Retirement

There are a few rules that clients are advised to follow to improve their financial prospects in retirement. For those who don’t want to work in their 60s and 70s, taking advantage of catch-up retirement contributions is a great start.

If you’re 50 or older, you can put an additional $6,000 into your 401(k) over the $19,000 annual limit for 2019. You can also put in $1,000 more in your traditional or Roth IRAs, if you’re 50 and over. The annual limit for everyone else is $6,000 for 2019.

Other important steps that can help expedite your retirement age include:

  • Medigap plans or Medicare Advantage for health care: Medicare benefits begin at 65, which make it easier to retire at 65 than at age 60 or 62. Medicare, however, won’t cover all your health care expenses. On average, expect it to cover about 50-60% of the health care costs you’ll have. To gain additional coverage many retirees purchase supplemental insurance (a Medigap policy) or a Medicare Advantage plan. This is one of the decisions you’ll need to make at 65.
  • Taking retirement account withdrawals now or later: The IRS requires you to take distributions from IRAs and other qualified retirement plans starting at your age 72. However, you can withdraw funds before this age, and sometimes for tax reasons, it makes sense to do so. If you delay Social Security, and/or have a spouse younger than you, there are often big tax planning opportunities that exist between age 65 and 70.
  • Seeking professional advice: Many people seek professional advice as they age. Hiring a retirement financial planner brings peace-of-mind that they are not missing opportunities or strategies that can help them. It also provides continuity for one spouse who may not be comfortable managing their own money if their other half passes first. What’s more, retirement income advisors can show you how to pay less in taxes during retirement, advise on Social Security benefits, show you how your savings can generate retirement income, and can help you weigh out the pros and cons of investments.

Retire on Your Terms with CKS

Raising the retirement age is an emotional issue that seems grossly unfair to many. At CKS Summit Group, We listen, we understand, and we help.

We believe professionally managed tactical stock market and non-stock market portfolios can provide healthy, long-term upside growth potential. It can also be very effective at preserving principal while allowing for a high degree of downside risk protection.

CKS Summit Group believes the right mixture of carefully chosen non-stock market and managed market accounts can create a blended portfolio which is capable of producing increasing income, stable growth, preservation of principal, safety and flexibility all at the same time.

To create your own personalized Retirement Income Plan, schedule your complimentary strategy session here, or call us direct on 586-286-5820.