Know your income sources
Planning for the next phase in your life is like putting together a puzzle with many different pieces. The first step is identifying potential income sources -- you will want to generate an estimate of earnings in order to budget for bills:
- Social Security: The Social Security Administration offers an online calculator that can provide a rough estimate on what you would be entitled to based on various retirement ages. Go to www.ssa.gov.
- Pensions and Deferred Compensation 457(b): Before you retire, be sure to fully fund your plan to maximize your benefits. Ask your employer the following questions: Do your benefits increase with inflation and, if so, how is the increase calculated? If you pass away, how will the survivor benefit be calculated?
- Other Income Producing Activities: Many retirees plan to work part time, consult or freelance in their retirement years. Other possible resources include rental property. Be aware that if you are already receiving Social Security payments, the additional income from other activities may affect your benefit payments.
- Retirement Savings/Investments: IRAs, Roth IRA's, tax-advantages plans, and other taxable accounts can provide income stream in retirement. Consider how much you can afford to withdraw each year without exhausting your nest egg. Consider the tax consequences, as well as which accounts you will tap into first and which ones you will defer to a later date.
Review your plan at least once a year to ensure you are on track to meet your goals. Be sure to contact the credit union's Financial Planning and Education Center, where our the team from MAF Companies is available to assist and help you plan for retirement. For a confidential consultation, please call 312.499.8888, or email firstname.lastname@example.org.