What to Know About Retirement Income (And How to Boost Yours)
This story has been adapted from a former article written by Siege Media
Since the onset of the COVID-19 pandemic, many people are more concerned than ever about their financial preparedness—and knowing how much to tuck away for retirement can be difficult to figure out if you don’t know where to begin.
Taking a peek at the average retirement income can give you a good baseline to measure your standing. According to data reported in 2019 by the U.S. Census Bureau, the average median retirement income is $47,357 per year. That being said, this amount can vary from one part of the country to another, and even from state-to-state.
Not sure the average income will be enough for you? By negotiating better benefits at work, planning ahead, and maximizing your earnings later in life, you’ll be more on track to hitting one of your biggest goals: achieving happy and healthy golden years.
How to Negotiate Better Benefits
First, consider what your employer is already offering. Are you benefiting from everything that’s offered? For example, if your employer offers a match for contributions to your 401k, but you’re not contributing to your 401k, that’s a good place to start.
Once you’ve determined you’re already benefiting from everything your employer offers, think about what’s missing. Do you have a great salary but no wellness package or insurance? Do you have great insurance offerings, but your limited salary is preventing you from contributing much to your retirement accounts?
While not many employers offer pension plans anymore, it doesn’t hurt to ask if your employer does. Once you have an understanding of what you’re missing, it’s time to do some homework—because the last thing you want to do is walk into your benefits manager without any data to back up your argument. Doing your homework beforehand can help strengthen your argument for why you deserve what you’re asking for.
Since you now know what you’d like to negotiate for, do some research on what other companies offer employees in a similar position to yours. If you work remotely and live in a more expensive part of the country, bring research to back that up. Likewise, make a list of ways you’ve strengthened or improved your company to show you’re a valuable employee, and that you really do deserve these benefits.
Negotiating can be a scary experience if you don’t go into it with confidence and conviction. Practice with a friend or family member to figure out the best way to present your argument. It’s also a good idea to practice with multiple different people. This will provide you with a variety of different perspectives and possible responses you can prepare for.
What to Plan For Now
Knowing the retirement lifestyle you want, various potential healthcare costs, and the cost of living in different locations are a few ways to better prepare for your retirement years now.
The decisions you make about how you’ll live can help delineate a framework for how you wish to spend your time as a retiree. Will you travel all the time, go golfing regularly, or stick around your hometown to spend time with your future grandkids?
You’ll also want to think about your average expenses and any emergency money you may want at your disposal.
While thinking about healthcare costs isn’t as exciting as thinking about future vacations, it’s just as (if not more) important. Understanding how your health is now—and any genetic conditions you may face later—can help you see how much you may want for healthcare in the future.
While you may not know exactly where you want to end up, thinking about where you want to live now can help you prepare for whatever happens in your later years. Get to know the average cost of living in different parts of the world or country to understand how much you may need later on.
3 Ways To Maximize Your Retirement Income Later
There are many creative ways you can work to maximize your retirement income. Distributing your funds wisely, delaying Social Security benefits, and continuing to work are just a few.
Almost 50% of Americans plan to rely on personal financial assets for their main source of retirement income, according to the Transamerica Center for Retirement Studies. With that in mind, it’s important to wisely distribute these funds so you don’t run out of money. There are several different ways to do so, including:
Using the 4% rule
Withdrawing a fixed percentage or dollar amount
Using the bucket method
Whatever you decide, plan early and be disciplined. Certain methods may be better for your personal circumstances than others, so talking with a financial advisor when the time comes may be beneficial to you.
While you can start receiving these benefits as early as age 62, delaying payouts until age 67 (or your full retirement age) will ensure you receive the full benefit. By withdrawing early, your benefit is reduced by a certain percentage.
For many people, retiring can come as a shock. From being busy all the time and feeling useful, to having loads of free time on your hands, it can be stressful at first. However, one of the best ways to transition into retirement and maximize your retirement funds is to continue working. With loads of experience and knowledge under your belt, you may consider setting up a consulting business or doing freelance work on your own schedule.
Saving for retirement is a long process that shouldn’t be delayed. If you’re worried you’re not on track to hit the average retirement income—or worried you won’t have enough funds to live through retirement—talk with a financial planner or advisor who can help you set goals and make solid plans to get where you ultimately want to be.
