Your Biggest Retirement Questions: Answered

by: Russ Thornton

Do I have enough saved to retire?

What do I do with my pension?

When should I start taking Social Security?

What should my lifestyle look like?

If you’re gearing up for retirement, you probably have a thousand questions running through your mind at any given moment. You might be wondering whether you have enough money saved, if you’ll be financially okay throughout retirement, and how you’ll spend your time away from your full-time job.

Those questions just barely scratch the surface of everything you’ll work through to build your ideal lifestyle in retirement. Today, I want to walk you through some of the retirement questions I hear most frequently – and how you can start answering them.

Do I Have Enough Saved to Retire?

Most people are constantly wondering whether or not they’re doing enough for their financial future – a big part of this is trying to figure out whether you’ve saved (or are saving) enough for retirement. The grim truth is that most Americans are dramatically undersaving for their retirement needs by almost 20%. The best way to figure out whether you’re on track with your retirement saving is to think through your retirement goals.

Building out a budget for how you plan to spend your money during retirement, including bigger lifestyle dreams like travel, or leaving a legacy, is the perfect place to start. Wrapping your head around recurring expenses, and larger expenses that will come up throughout the 20-30 years (or more) as a retiree can help you to estimate how much money you actually need.

From there, you can work backward to reach your savings goal – and to know whether or not you’re saving enough to live the type of retirement you want.

What Do I Do With My Pension?

Many Atlanta pre-retirees, including Coca-Cola employees, are working with a pension. There are typically a few different options that you can take when you retire with a pension, including:

  1. Lump sum
  2. Single-life annuity
  3. Joint and survivor annuity
  4. Period-certain annuity

Each of these options comes with a different set of benefits. Lump sum, for example, might serve someone well if they wanted to invest the remainder of their pension on their own. The joint and survivor annuity option may be a good choice for you if you’re willing to take a reduced monthly benefit during your lifetime to ensure that your spouse will receive a consistent benefit after you pass away.

Weighing your options carefully in an effort to maximize your pension benefit, while still providing you and your spouse with enough cash flow to last throughout retirement, is key.

When Should I Start Taking Social Security?

Social Security can often play a large part in your retirement income and cash flow. You have a few different options for taking Social Security:

  1. Start your benefits early (usually between 62 and your full retirement age, according to Social Security)
  2. Take benefits at your full retirement age (age 66 if you’re born between 1943 and 1960)
  3. Delay benefits until age 70

Some people choose to delay benefits until after their full retirement age to receive an increased benefit. Some choose to take them early if they need the extra funds to supplement their retirement income.

There’s no “right” answer. Instead, you should take a look at how your retirement savings stacks up to your retirement lifestyle goals. Knowing whether your savings will be enough (or more than) might be able to help you determine when you need to take Social Security to supplement the income drawn from your savings.

What Should My Lifestyle Look Like?

Making the transition from full-time career person to full-time retiree can feel both exciting and intimidating. You’re giving up a lot when you retire: a routine you can count on, steady income, colleagues, goal-oriented tasks that keep you moving, and the sense of accomplishment you’ve been able to achieve throughout your career.

You have to replace a lot of those things when you retire, and it can be tough to know how to navigate that transition. If you want a fulfilling retirement, you have to think through more than just the dollars and cents of your plan. You might want to ask yourself a few lifestyle-focused questions, including:

  1. Do I want to live where I am currently? Or do I want to relocate and downsize?
  2. Do I want to spend my time with family and friends, or trying new experiences?
  3. Will I volunteer during retirement?
  4. Am I planning to join a community organization?
  5. Does working part-time in retirement make sense for me?

You may have grand dreams for yourself in retirement – from traveling, to golfing every day, to buying a vacation home. But those ideas aren’t necessarily going to help you fill your time when you wake up on a Tuesday without a career to pursue. Take your time thinking about what type of lifestyle you want to create for yourself – even on those random Tuesdays when you don’t have anything planned.

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.