Every individual has a retirement from their workplace someday. One of the biggest questions that the person faces at that point of time is how does/she manage the funds and how long will they be
lasting. “As people approach their retirement years, the decisions become more complex and they have higher stakes. It is going to take some time to work through the decisions,” explained Steve
Vernon, a research scholar at the Stanford Center on Longevity
One needs to change the mindset in order to survive this period. One must understand that it’s okay to spend money in their retirement because that is the reason for which it has been uniquely saved. Next, one needs to move to diversified portfolios of retirement income, away from investment portfolios of retirement savings. It is a very delicate act and one needs to do it carefully and with
proper knowledge of the subject matter.
According to Vernon, the best way to maximise lifetime incoming is by postponing the benefits one is
supposed to receive. As per Vernon, “For every year you delay starting Social Security, you can significantly increase your retirement income.”
The social security benefit increases at 8 percent per year for every year postponed in collecting the social security benefit after the retirement age and this gives a pretty good return at the end of the
day.
This is not possible for many people, as they need the money to pay off their expenses and bills. As a result, the rise of the inflation rate also causes social security benefits to increase.
As per Friends Talk Money co-host Terry Savage, “A three percent rate of inflation — this historical average — can cut the spending power of your dollars in half in 25 years, and that can really impact
your retirement lifestyle.”
Investment is an option but it does not go without risk. According to Vernon, if one is planning to stay retired for 20-30 years then he/she must be prepared for at least three to four stock market crashes,
which can negatively affect the funds one is having in-store. In order to be prepared for such situations, it is advisable to keep basic income like an annuity and social security in their hands, so that they can survive tough economic conditions of the market, as and when it comes. If the market crashes, one must cut off expenses which especially fall into the category of ‘wants.’ If one manages to do so, he/she should have a smooth retirement ahead of them.
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