Key Points The contribution limits for 401(k)s are rising in 2026. Before you increase your 401(k) savings rate, make sure you're happy with your employer's plan. You may want to save outside of a 401(k) for more investment choices or easier access to your money early. The $23,760 Social Security bonus most retirees completely overlook › There's a reason workers are encouraged to save for retirement as best as they can. If you don't retire with a decent-sized nest egg, you might have to rely on S ...

Core Insights - The article discusses the complexities of deciding when to claim Social Security benefits, emphasizing the importance of considering longevity risk and opportunity cost in retirement planning [3][4][6]. Summary by Sections Social Security Claiming Age - Individuals can start claiming Social Security benefits at age 62, with full retirement age (FRA) between 66 and 67, and can delay benefits until age 70 [5]. - Delaying benefits can increase monthly payments by up to 8% per year according to the Social Security Administration [4][5]. Breakeven Age Analysis - The breakeven age is the point at which cumulative benefits from delaying Social Security exceed those from claiming earlier. For someone eligible for $2,000 per month at FRA of 67, the breakeven age is around 78 years and eight months if claimed at 62 [1][8]. - If the individual waits until age 70, the breakeven age rises to approximately 80 years and five months [1]. Longevity and Risk - Estimating longevity is uncertain, with average life expectancy in the U.S. around 78.4 years, but individual outcomes can vary significantly [2]. - If an individual passes away before age 70, they may receive no benefits despite years of contributions [2][3]. Opportunity Cost Considerations - The analysis of delaying benefits often overlooks the time value of money and opportunity costs associated with accessing and investing earlier benefits [6][7]. - For example, if an individual retires at 62 but delays claiming until 67, they may need to withdraw from savings, forgoing potential investment returns [6][8]. Adjusted Breakeven Age - When factoring in opportunity cost, the breakeven age can extend significantly. For instance, with a 5% annual return on investments, the breakeven age could rise to approximately 88 years and eight months [8]. - If the expected return is 8% annually, the breakeven point may not be reached within a typical lifespan, suggesting that claiming benefits earlier while keeping retirement savings invested could yield better financial outcomes [9]. Financial Strategies - To mitigate opportunity costs, retirees may consider maintaining a significant emergency fund or utilizing a home equity line of credit (HELOC) to avoid early withdrawals from investments [10][12]. - A high-yield account can help grow emergency funds, offering competitive interest rates and easy access to cash [11]. Professional Financial Advice - Given the complexities and uncertainties in retirement planning, working with a qualified financial advisor can help individuals account for various factors such as inflation, healthcare costs, and spending needs [14][16]. - Companies like Vanguard offer personalized advisory services to assist in creating tailored retirement plans [15][16].

Key Points Age 60 is a pretty big milestone on the road to retirement. You can tap your IRA or 401(k) penalty-free, but you may want to wait. While you're not old enough to claim Social Security, it's a good time to start thinking of a claiming strategy. The $23,760 Social Security bonus most retirees completely overlook › Reaching the age of 60 is a big milestone. It marks the beginning of a new decade -- one that might bring about exciting changes, like getting to retire and enjoy the freedom t ...

Key Points Some states don't have any income tax, meaning retirement income is also exempt. Seven states offer exemptions for various forms of retirement income. Forty-one states, plus Washington, D.C., don't tax Social Security benefits. The $23,760 Social Security bonus most retirees completely overlook › When you live in America, one thing you've likely come to accept is the tax system. There are taxes on your income, products and services you buy, property you own, inheritance you receive, an ...

SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below. Suppose you have $1 million in a Roth IRA and will receive $2,250 each month from Social Security when you become eligible for benefits. Would this be enough to allow you to retire at age 62? The answer to that question could be yes, but there’s a chance it may require you to live on a tighter budget in retirement than you might want. Even then, you could outlive your savings depending on how you manage y ...

Retirees can expect big changes next year -- both good and not-so-good.Next year will bring a slew of changes to the Social Security program, from a new cost-of-living adjustment (COLA) to a higher maximum benefit to raised earnings test limits.But not all of the changes are positive, and there's some not-so-good news awaiting retirees in 2026, too. Here's everything retirees need to know about what's ahead with Social Security. Big changes are coming in 2026Let's start with the good news: Your benefit will ...

Core Insights - The individual plans to retire at age 63 with a combination of guaranteed income sources and portfolio withdrawals [1][5][6] - The guaranteed income includes a monthly pension of $400 and Social Security benefits estimated at $2,700, totaling $3,100 per month, which could drop to $2,425 with a 25% reduction [5][6] - The 401(k) balance is over $1 million, with a current average return of 7%, but plans to shift to more conservative investments, which may lower future returns [1][6][7] Guaranteed Income - The guaranteed income sources consist of a $400 monthly pension and Social Security benefits of $2,700 per month, providing a total of $3,100 monthly [5] - If a 25% reduction in Social Security occurs, the total guaranteed income would decrease to approximately $2,425 per month [5] Portfolio Withdrawals - The 401(k) can be a source for withdrawals, with the 4% rule suggesting an initial withdrawal of about $40,000 in the first year of retirement, equating to roughly $3,300 per month [6][7] - This withdrawal strategy aims to ensure the portfolio lasts at least 30 years, adjusting for inflation in subsequent years [7]

Core Insights - A record number of Americans are reaching retirement age this year, with an estimated 4.1 million expected to retire annually through 2027, a trend referred to as the "Peak 65 Zone" [1] Financial Planning for Retirement - Many younger retirees lack pensions, which previously helped supplement Social Security, leading to uncertainty about funding their retirement [2] - A solid financial plan is essential for a comfortable transition into retirement [2] Preparation Strategies - It is advised to budget before submitting retirement notices, assessing net worth and planning for current and future expenses [4] - The 4% rule is suggested as a guideline for withdrawals, allowing retirement savings to last approximately 30 years, while the average American enjoys about 20 years post-retirement [5] - Individuals with workplace pensions should review their benefit statements to understand monthly payouts, and married couples may have different options regarding spousal benefits [6] Social Security Considerations - Individuals turning 65 qualify for Social Security, with benefits based on tax contributions and the choice to collect early or delay [7] - The Social Security Administration provides an online tool to estimate potential benefits under various scenarios [7]

If you’re planning on making tax-deferred retirement accounts the last pot of money you tap after retirement, you’ve got a lot of company. And why not? The idea that your 401(k) or traditional IRA can keep growing and churning out more tax-deferred money seems like a sound strategy. But you may want to rethink this conventional wisdom. Instead of focusing on deferring taxes, Morningstar’s Mark Miller suggests looking at how to minimize your overall total taxes during retirement – which can mean tapping ta ...

Age 65 is a major transition for many individuals as they shift to thinking about retirement and begin to contemplate benefits like Social Security and Medicare. Retirement planning means you’ll have to consider taxes, healthcare, your retirement budget and more. With $1.5 million in an IRA and two Social Security payments to rely on, a married couple should have some flexibility for retirement, but their individual circumstances and how they strategize can make a big difference in their quality of life. H ...