The new year will move us one year closer to retirement. But few Americans are
more prepared than last year. We may be tracking the stock market more closely
than ever, but we still need better saving and investment
strategies
to get ready to retire. Here are 10 New Year's
resolutions for retirement.
Boost
your Social Security checks. Workers often sign up for Social
Security
benefits
as soon as possible at age 62. But payments increase by 7 to 8 percent for each
year a worker delays his or her start date between ages 62 and 70. "It's a much
bigger payout if you can afford to wait," says Droms. Monthly
checks are calculated using the 35 years you earned the most. Thus, every
top-earning year in your 60s cancels out a year earlier in your career when you
earned less.
[See 6 Ways to Maximize Your Social Security
Payout.]
Coordinate retirement with your spouse. Married workers
can strategize about when to sign up for Social Security to maximize their total
benefits. Spouses are entitled to Social Security benefits based on either their
own earnings or checks equal to 50 percent of the higher earner's benefit. When
one spouse passes away, the survivor's benefit for the other is the full amount
of Social Security the higher earner received. "If you and your spouse are
approaching retirement age, put together a plan for how to claim Social Security
benefits," says Andrew Biggs, a resident scholar at the American Enterprise
Institute and a former deputy commissioner of the Social
Security
Administration.
"Claiming at different ages can increase total lifetime Social Security benefits
as well as generating greater protection for a surviving spouse later in
life."
Downsize
your lifestyle. There's a reason retirees
are known for hitting up early-bird specials and inquiring about senior
discounts. Most don't have a lot of disposable income
to burn. Downsizing into a smaller house or condo after the children move out or
selling a second car previously used for a spouse with a separate commute can
give a major boost to your nest egg. After you exit the workforce, consider
relocating to a locale in the United States or even abroad where the cost of
living and taxes are lower. A growing number of retirees are also sharing a roof
with their adult children to cut costs for both generations. Generally, the
grandparents provide some child care for grandchildren, and the rest of the
family pitches in with elder care as needed.
[See 8 Tips for an Affordable Retirement
Abroad.]
Delay your
retirement date. For workers without traditional pensions, a life of
full-time leisure may be a thing of the past. Just over a quarter of Americans
between ages 65 and 75 continued to work in 2008, according to the Census
Bureau. Workers on the cusp of retirement with meager savings will have little
choice but to continue working. Delaying retirement packs the double punch of
giving you more time to tuck money away and reducing the number of years that
your savings must last. "Putting off retirement a year or two can do really
wonderful things for your retirement situation," says Droms. "Leave your money a
bit longer, and give it a chance to recover without depleting your assets at a
bad time to deplete them." But that doesn't mean you need to stick with a
full-time job you dislike. About 40 percent of older workers cut back on their
hours or transitioned into part-time work. Look into consulting, blogging,
teaching, and other opportunities to bring in some extra income from your
accumulated experiences.
[See Deciding When to Delay Retirement.]
Develop a
nonfinancial plan. After you leave the workforce, the hours that used
to be dominated by work can be spent however you wish. Come up with a plan to
pursue a hobby, volunteer, or spend time with your grandchildren. "If you say,
'I'm going to retire in five years so I can start my own business, so I can
spend more time with my family, so I can do something I love,' I think you are
more likely to reach that goal," says Keller. But recognize the difference
between goals and daydreams. Says Keller: "If retirement is a goal but you are
not saving for it, then retirement is just a fantasy."
Boost
your Social Security checks. Workers often sign up for Social
Security
benefits
as soon as possible at age 62. But payments increase by 7 to 8 percent for each
year a worker delays his or her start date between ages 62 and 70. "It's a much
bigger payout if you can afford to wait," says Droms. Monthly
checks are calculated using the 35 years you earned the most. Thus, every
top-earning year in your 60s cancels out a year earlier in your career when you
earned less.
[See 6 Ways to Maximize Your Social Security
Payout.]
Coordinate retirement with your spouse. Married workers
can strategize about when to sign up for Social Security to maximize their total
benefits. Spouses are entitled to Social Security benefits based on either their
own earnings or checks equal to 50 percent of the higher earner's benefit. When
one spouse passes away, the survivor's benefit for the other is the full amount
of Social Security the higher earner received. "If you and your spouse are
approaching retirement age, put together a plan for how to claim Social Security
benefits," says Andrew Biggs, a resident scholar at the American Enterprise
Institute and a former deputy commissioner of the Social
Security
Administration.
"Claiming at different ages can increase total lifetime Social Security benefits
as well as generating greater protection for a surviving spouse later in
life."
Downsize
your lifestyle. There's a reason retirees
are known for hitting up early-bird specials and inquiring about senior
discounts. Most don't have a lot of disposable income
to burn. Downsizing into a smaller house or condo after the children move out or
selling a second car previously used for a spouse with a separate commute can
give a major boost to your nest egg. After you exit the workforce, consider
relocating to a locale in the United States or even abroad where the cost of
living and taxes are lower. A growing number of retirees are also sharing a roof
with their adult children to cut costs for both generations. Generally, the
grandparents provide some child care for grandchildren, and the rest of the
family pitches in with elder care as needed.
[See 8 Tips for an Affordable Retirement
Abroad.]
Delay your
retirement date. For workers without traditional pensions, a life of
full-time leisure may be a thing of the past. Just over a quarter of Americans
between ages 65 and 75 continued to work in 2008, according to the Census
Bureau. Workers on the cusp of retirement with meager savings will have little
choice but to continue working. Delaying retirement packs the double punch of
giving you more time to tuck money away and reducing the number of years that
your savings must last. "Putting off retirement a year or two can do really
wonderful things for your retirement situation," says Droms. "Leave your money a
bit longer, and give it a chance to recover without depleting your assets at a
bad time to deplete them." But that doesn't mean you need to stick with a
full-time job you dislike. About 40 percent of older workers cut back on their
hours or transitioned into part-time work. Look into consulting, blogging,
teaching, and other opportunities to bring in some extra income from your
accumulated experiences.
[See Deciding When to Delay Retirement.]
Develop a
nonfinancial plan. After you leave the workforce, the hours that used
to be dominated by work can be spent however you wish. Come up with a plan to
pursue a hobby, volunteer, or spend time with your grandchildren. "If you say,
'I'm going to retire in five years so I can start my own business, so I can
spend more time with my family, so I can do something I love,' I think you are
more likely to reach that goal," says Keller. But recognize the difference
between goals and daydreams. Says Keller: "If retirement is a goal but you are
not saving for it, then retirement is just a fantasy."