How Much Guaranteed Income Do You Need? If you can rely on a check every month that will pay your bills for you, you’ll be more comfortable in every aspect of your financial life. Discover guaranteed retirement income strategies from Reby Advisors:
What are your potential sources of guaranteed income?
You can start by determining exactly how much you can expect in Social Security benefits when you become eligible at SSA.gov. From there, you can access a detailed benefits estimate that is based on your actual earnings, giving you a pretty good idea of what you can expect to collect when you become eligible.
Remember, delaying your Social Security benefits is usually a smart move financially. Your guaranteed benefit goes up each year you delay, topping out at age seventy. If you wait until age seventy to begin collecting benefits, you will get monthly checks that are 32% higher than if you had started collecting at age sixty-two. The breakeven age for those who delay collecting the full eight years is around age seventy-seven, meaning even though you started getting checks eight years later than the earliest day possible, by age seventy-seven, the sum of the higher monthly payments equals what you left on the table for those eight years. After age seventy-seven, the higher monthly payments are all “profit,” and your cost-of-living adjustments each year become exponentially larger, because the percentage increases are being made on a higher dollar amount.
As mentioned earlier, and I can’t say this enough, it’s well worth it to sit down with a Social Security expert or a Certified Financial Planner to discuss the ins and outs of this valuable retirement asset. You really only have one chance to make the right decision for yourself and your family. With potential gains of six figures and beyond at stake, make sure you understand all of your options and the consequences and benefits of each.
Keep in mind, this is not only about getting more money from the government over a lifetime; it’s also about having a higher guaranteed income stream and putting less stress on your portfolio to fund your lifestyle later in life. So the planners in my office and I, as we’re helping clients plan to never run out of money, almost always recommend delaying Social Security as long as possible for these reasons.
After you have a good idea how much you can expect from Social Security, you can move on to any company pensions for which you are eligible. If you are eligible for a traditional pension, you will want to factor that into the equation and include it in your guaranteed income calculations. You will want to determine whether your pension benefit is indexed to inflation and whether or not your spouse will continue to receive a portion of the benefit in the event of your death.
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