An annuity can be a great way to help optimize retirement benefits.
All your working life has led up to the moment of retirement, when you can finally relax and enjoy a more financially confident environment. To accomplish this, you should optimize your savings potential prior to retirement.
One of the biggest decisions that could affect the overall arc of your retirement funding is when to actually accept Social Security◊ benefits. If you begin taking benefits as early as age 62, you won't receive the full amount of the benefits you qualify for. For every year you delay taking benefits, you may earn nearly 8 percent more per year.
By delaying Social Security benefits until you reach full retirement age 70, you'll receive the largest payout possible. This approach will help provide you with more reliable, steady income throughout your retirement.
Though you may thinking it would be ideal if you and your spouse retire simultaneously, the better strategy could actually be to do so a few years apart, according to Time magazine. That's because if you retire, then your family can still live on the work income and perhaps just a small portion of the retired spouse’s total retirement assets.1
This strategy allows one of you to retire but not deplete your retirement funds as quickly. Depending on your career path, financial situation, age and health, speak with your spouse to decide how you should approach retirement. If you're older and have already reached the full retirement age, then it may make sense for you to retire first, whereby your spouse, who may be a few years younger, can stay in the workforce a little longer and continue to contribute to retirement accounts.
An annuity can also be a great means to help optimize your retirement benefits by providing a guaranteed* stream of income for your life.**
This article is meant to provide general information on issues that many people consider in making the decision as to whether or not they should buy annuities; and if they do decide to buy, which types of annuities and which annuity benefits and additional riders will best suit their goals and needs. This information is not designed to be a recommendation to buy any specific financial product or service.
*Annuity guarantees rely on the financial strength and claims-paying ability of the issuing insurance company and are not guaranteed by any bank or the FDIC.
**Some annuities may have a lifetime income guarantee as part of the base policy; others may have riders available that provide this benefit. Riders may also be available for benefits like an annual increase to help combat inflation or for as much as doubling your income in case of a qualifying health event. These annuities are not long-term care and are not substitute for such coverage. Optional riders may be available with a charge.
◊ Joshua Mellberg and J.D. Mellberg Financial are not associated with, nor endorsed by, any government agency, including the Social Security Administration.
Josh Mellberg is insurance licensed in all 50 states (AR364647/CA0G91919/TX1567166) and all employees of J.D. Mellberg Financial have the appropriate licenses for the products they offer.
1“If You Want to Retire in 10 Years, Do These 5 Things Now.” Money. Accessed on February 4, 2015. http://time.com/money/3606172/pre-retirement-moves/