6 Basic Retirement Rules

The following Retirement Rules will equip you with basic strategies to help you build your retirement fund.

For most people "retirement" is seen as a time during which you withdraw or cease from work. However, there is never a time in which we stop having value or influence in the lives of others.  In fact, God has created us to minister to others for a lifetime. In order to faithfully serve God in your retirement years, you must first make sure those years are funded.

Rule 1:  Save at least 10% of your income towards your Future Funded Ministry plan

This provides a simple target for you to work towards as part of a disciplined savings approach. You may start at a lower level and then focus on increasing your contributions over time to get to this percentage.

Rule 2:  Plan on living 20-25 years in retirement after age 65

People who live to age 65 have a 50% chance of living to age 85 and a 25% chance of living until 92.

Rule 3:  Plan on needing 70% to 80% of your income in your Future Funded Ministry years

Certain expenses will likely disappear or be reduced once you leave the workplace.

Rule 4:  To make your savings last, withdraw less than 4% a year

This simple formula has proven very accurate over time. It provides a guideline for how much to withdraw each year without exhausting your retirement savings.

Rule 5:  Rebalance your asset allocation at least once per year

Rebalancing is when you adjust your portfolio back to an appropriate asset allocation mix. This keeps your investments aligned with your risk tolerance and goals.

Rule 6:  Bonds percentage of your portfolio equals your age

This rule is a reminder that your portfolio needs to change as you age, becoming gradually more focused on avoiding risk and providing income.

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For questions regarding retirement planning, contact a service specialist today!

I’m Getting Ready to Retire. What Should I do with My Money in My Retirement Account?

Are you retired or about to retire and wondering what you should do with the funds in your retirement account? Here are a few options:

Option 1: Depending on your balance, you can keep the funds invested in your retirement plan. If you like the funds you’re investing in, it makes sense to just leave the account where it is. However, you can no longer contribute to your retirement account once you are separated from employment.

Option 2: You can rollover the funds to an IRA with Envoy Financial or another financial institution that handles IRAs. This will give you more control over your investment options and saves on taxes as rollovers are tax free until you take a distribution from the IRA.

Option 3: You can take a partial or full distribution of the account. This is one of the least desirable options. If you do this, 20% will automatically be withheld from your funds withdrawn as a prepayment of federal taxes. If you are under the age of 59.5, you may owe an additional 10% early withdrawal penalty on anything not rolled over.

If you have other questions and would like to speak with an advisor, we’d love to help lead you in the right direction.

Make sure you’re prepared for retirement. Get some valuable tips on how to make sure you’re financially prepared for retirement.

Social Security During Retirement: What Are Your Options?

When Should You Start Taking Your Social Security?

You are eligible to file for social security benefits when you turn 62, but if you do, your monthly check will be reduced significantly for the rest of your life. You may have little choice if you are out of work or in poor health and need the money to pay expenses. But if you have the wherewithal to work a few more years or have other sources of income, delaying checks until age 66, or your full benefit age, will increase your monthly amount by 33% or more.

How Can You Boost Your Social Security Payouts?

That’s not the only way working longer can boost your payouts. Your social security benefits are based on your highest 35 years of earnings. If you are a highly paid employee, working longer will displace some of your lower-earning years. You can see the Social Security Administration online tool that allows you to review your earnings record and get an estimate of your benefits. You should review this record annually because unreported or under-reported earnings reduce your monthly payments. To get your online statement, go to ssa.gov/mystatement.

If you work and get paid until age 70 and you start taking your full social security benefit at age 66, you can save four years of social security payment into your pretax or Roth retirement account. What a difference this makes!

Make Sure You’re Ready To Retire

Re-assess what you will spend in retirement. Most people underestimate how much they will spend when they retire. However, some financial planners and retirement calculators advise much more than you will need. While you may save on dry cleaning and commuting costs, you will still need to pay for groceries, utilities, and gas. If you refinanced to take cash out of your home, you may still have mortgage payments. And even after you’re eligible for Medicare, you will spend some money on health care costs. Fidelity Investments estimates that the average 65-year old couple will spend $260,000 on health care in retirement (“Health Care Costs,” 2016). Still convinced you can live on less?

Here is a good idea—try living on your projected retirement income for 6 months while you are still working. This exercise will force you to evaluate your spending and cut back if needed. That means you’ll be able to save more. And at this point in your life, saving is one of the few things you can control.

Are you getting ready to retire? Do you wonder what you should do with the money in your retirement account?