Planning for a comfortable and fulfilling retirement involves much more than just saving money. Read on for helpful answers to the three most commonly asked retirement questions.
How Much Will Social Security Cover?
One of the most pressing concerns for adults approaching retirement is understanding how much financial support they can expect from Social Security. Generally, Social Security benefits are calculated based on your 35 highest-earning years and the age at which you decide to start claiming your benefits. For example, if an individual’s average indexed monthly earnings (AIME) is $10,000 over their 35 highest-earning years and they decide to claim benefits at their full retirement age (FRA) of 67, their monthly Social Security benefit would be approximately $3,895. It’s important to note that while Social Security can provide a stable foundation for your retirement income, it typically only replaces about 40 percent of pre-retirement earnings for the average retiree.
What’s the Difference Between My IRA and Social Security?
It’s essential for adults approaching retirement to understand the distinctions between their Individual Retirement Accounts (IRAs) and Social Security, as well as how withdrawals from IRAs can impact their Social Security benefits. While Social Security serves as a government-provided safety net for retirees, IRAs are personal investment accounts that allow individuals to save for retirement with tax advantages. The funds in an IRA are contributed by the individual and grow over time through investments in assets like stocks, bonds, and mutual funds.
Depending on your total income, up to 85 percent of your Social Security benefits may be subject to income tax if your IRA withdrawals push you above certain income thresholds. To minimize the tax impact, it’s crucial to strategically plan your IRA withdrawals, considering factors such as your age, tax bracket, and other sources of income. Consulting with a financial planner can help you make informed decisions on balancing withdrawals from your IRA and Social Security benefits to maintain a comfortable and financially stable retirement.
How Will I Spend My Newfound Free Time?
Retirement offers a wealth of newfound free time, leaving many seniors confused and anxious. Engaging in hobbies, pursuing lifelong interests, and maintaining social connections can contribute to overall well-being and happiness in retirement. Some popular activities for seniors include volunteering, joining clubs or community groups, taking up new hobbies such as painting or gardening, and staying physically active through walking, swimming, or yoga. Consider moving to a retirement community for seniors where these types of events, activities, and resources are readily available to residents. Additionally, many retirees find fulfillment in pursuing a part-time post-retirement career that aligns with their passions or interests, allowing them to earn extra income while remaining engaged and stimulated. It’s important to note that Social Security recipients past their FRA are not subject to payment reductions for post-retirement earnings.
Knowing the answers to the three most commonly asked retirement questions prepares you for a successful and enjoyable transition into your golden years. And if you’re looking for a change of scenery, Arista Realty Group is here to help! Browse our available Lakewood Ranch homes for sale to find the ideal retirement community in beautiful Central Florida.