Category: Social Security

When to start collecting Social Security benefits. Chapter 5.

You have three main options:

  • Start collecting early
  • Start collecting at full retirement age
  • Start collecting after full retirement age

 What are the trade-offs? 
Here’s a hypothetical example. Let’s assume that your full retirement age is 66 and you are eligible for a benefit of $1000 per month at full retirement age.
If you start collecting at age

  • 62 you collect $750
  • 63 you collect $800
  • 64 you collect $866
  • 65 you collect $933
  • 66 you collect $1,000
  • 67 you collect $1,080
  • 68 you collect $1,160
  • 69 you collect $1,240
  • 70 you collect $1,320

Retirement planning more important than ever

The concept of retirement planning is relatively recent in human history.

Let’s face it, for most of human history there was no such thing as “retirement.” People’s lives were shortened by hunger, disease, childbirth, wars, and accidents.  A relatively few lived to a ripe old age.  For those who did, the plan was to have enough children who would support them when they became too old to work.

In the lifetimes of our parents and grandparents, pensions were created that provided an income after leaving work.  And, of course, social security made its appearance in the 1930s to supplement savings and pensions.

Due to poor investment performance companies realized that they could not continue to pay generous pensions for thousands of retirees so they who dropped them in favor of 401(k) plans, taking the burden of providing retirement income from the employer to the employee.   Even governments are finding that there is a limit to their ability to tax and pay people in retirement.    There are many ways people can take care of their retirement income needs:  401(k)s, IRAs, and the ever-faithful investment account.

The generation that can count on pension income for their retirement is now retiring.  The younger generation now has the responsibility to take care of its own future.  This makes retirement planning more important than ever, and no place for amateurs.  Give us a call to help you meet your retirement goals.

7 retirement planning myths debunked

If you ever plan to retire, you have to have a plan.  The days of depending on an employer pension and government benefits are rapidly disappearing and, especially if you are under 50, you are living in a  “yoyo” economy — short for “you’re on your own.”

There are a bunch of myths about retiring that need to be abandoned.

  •  It’s OK to postpone saving for retirement until other needs are taken care of.  Wrong.  There are always “other things” that interfere with saving for retirement and if you let them get in the way, you’ll never start.
  • Medicare will take care of almost all your health care needs.  In reality it will cover about half.
  • You’ll need far less income in retirement to maintain the same standard of living.  Only if you decide to become a hermit.
  • You can claim Social Security early and still get full benefits later.  Wrong.  When you begin taking benefits you are locked in (unless you pay it all back).
  • You should rely heavily on bonds rather than stocks as you get older.  Only if you plant to die soon and expect zero inflation.
  • Any retirement target-date fund will allow you to “set it and forget it.”  Target date funds vary widely in performance and there are no guarantees associated with them.
  • You’ll be able to make up a savings shortfall by retiring later or working part-time in retirement.  That’s a hope, not a plan.  You may not be physically able to work after retirement.   Because of the costs of benefits, many employers are reluctant to hire older workers.

A plan is needed, and needs to be constantly updated to keep you on the path to the kind of retirement that you want.

Connect With Us

Korving & Company, Investment Management, Suffolk, VA

Contact Us

Newsletter Signup

© 2021 Korving & Company, LLC