A recent survey by the Associated Press–NORC Center for Public Affairs Research reveals that about a third of adults age 50 and older think it is likely that they will outlive their retirement savings.
This anxiety is understandable. Today’s retirees face significant challenges. Employer pensions are disappearing. The cost of living is on the rise. Life expectancies are also increasing. But there is good news. If you are resourceful, there are ways to stretch your savings further than you thought.
Your estimated retirement income forecast seems to be falling short. Now what?
If your projected retirement income falls short of your projected expenses, you have several options.
- Work longer — Working longer does not necessarily mean at your old job. Many retirees get satisfaction from moving into new lines of work or starting their own businesses. Besides augmenting income, working during retirement helps many people feel productive and energetic, particularly when working in a field that they feel passionate about.
- Delay collecting Social Security — If you are eligible for Social Security, you can start collecting benefits at age 62. But if you start taking benefits before you have reached your full retirement age, your monthly benefit check may be reduced by up to 30% and the reduction is permanent. Waiting longer means your monthly Social Security checks will be larger for the rest of your life. Check out the Social Security Administration’s Retirement Estimator for a projection based on your actual Social Security earnings record.
- Managing expenses — Create a budget so you can track expenses and, if need be, work with a financial professional to calculate how much of your retirement income is taxable, partially taxable and income tax-free.
- Create a withdrawal strategy — Decide how much you can withdraw from your savings each year in retirement and prioritize withdrawals from taxable and tax-deferred accounts. Note: You need to determine the percentage of your retirement savings that you can withdraw rather than a particular dollar amount in order to keep pace with inflation rates and fluctuations in the market. Studies have shown that 3-4% is a good rule of thumb.
- Evaluate the cost of your home — You might have paid off your mortgage but have you thought about how much it costs to maintain your home? How much are your property taxes? What about major expenses like a new roof or replacing the furnace? If your retirement income is falling short, consider downsizing to a more manageable home.
Have you tried ‘Orange Money’ yet?
You can check to see if your retirement numbers are adding up by logging into your account at www.abaretirement.com and viewing myOrangeMoney®, an interactive education tool, which gives you a hypothetical view of the retirement income you can expect from your savings and other sources of income. You can also consult with a Voya Retirement Advisor* at 800.348.2272 or your financial professional to help keep you on track, continue to refine your goals, and make adjustments to your retirement income strategy to help your money go the distance with you.
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. We recommend that you consult an independent legal or financial advisor for specific advice about your individual situation.
The tax information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.
Neither Voya nor its affiliated companies provide tax or legal advice. Please consult with your tax and legal advisors regarding your individual situation.
*Advisory Services provided by Voya Retirement Advisors, LLC (VRA). For more information, please read the Voya Retirement Advisors Disclosure Statement, Advisory Services Agreement and the Program’s Fact Sheet. These documents may be viewed online by accessing the advisory services link(s) through the Program’s website at www.abaretirement.com after logging in to your account. You may also request these from a VRA Investment Advisor Representative by calling the Program’s information line at 800.348.2272. Financial Engines Advisors L.L.C. (FEA) acts as a sub advisor for Voya Retirement Advisors, LLC. FEA is a federally registered investment advisor and wholly owned subsidiary of Financial Engines, Inc. Neither VRA nor FEA provides tax or legal advice. If you need tax advice, consult your accountant, or if you need legal advice, consult your lawyer. Neither VRA nor FEA can guarantee results, and past performance is no guarantee of future results. Financial Engines® is a registered trademark of Financial Engines, Inc. All other marks are the exclusive property of their respective owners.