By Practicing Delayed Gratification, You Can Get an Increase in Income After Age 65
Retirement can give you a feeling of freedom, because once you retire, it means that you never have to work again. It can also have the opposite effect, because it also means that you will never get a paycheck or a work bonus again. Having total control over your time sounds fabulous, but living on a fixed income does not. It is downright nerve wracking to think that your expenses might increase, especially as you experience more age-related health problems, but your income will not. Of course, the worst-case scenario is that you never had any retirement savings to begin with, so you subsist on Social Security until it is time to enter a nursing home as a Medicaid beneficiary, at which point your only discretionary income will be the measly personal needs allowance (PNA). If this does not describe you, you have plenty of reasons to be grateful. Despite this, invading the principal of one savings account after another and watching the balances get progressively smaller is not most people’s idea of a good time. There is a way to get an income boost after reaching retirement age, but it takes patience and willpower. For advice on maximizing your retirement income, contact a Bronx estate planning lawyer.
Hold Off on Drawing Social Security Until You Are 70 and on 401(k) RMDs Until You Are 73?
Some sources of fixed income give you a bigger fixed income the longer you wait to start receiving it. For example, Social Security gives you monthly payments in the same amount for the rest of your life. The amount depends on how soon you start taking the money. If you can wait until you are 70, the latest that the law allows you to wait, you can get the biggest possible payment.
Likewise, the longer you wait to take money from your 401(k) account, the better. Your 401(k) account does not have limitless funds, but the rules of compound interest apply to it. The maximum age for starting to take required minimum distributions (RMDs) from your 401(k) account is 73. If you can wait until you are 73 to start taking them, then the RMDs can feel like a windfall.
What If You Can’t Stay in the Workforce Until You Are in Your 70s?
Of course, this plan assumes a level of health and wealth that not everyone has. You can really feel rich if you retire at 70 and start out with your Social Security income before getting the 401(k) windfall three years later. This plan might work if you retire before age 70, provided that you have some other sources of income besides your Social Security and 401(k), and the money is enough to sustain you between retirement and your 70th birthday.
Schedule a Confidential Consultation With a Bronx Estate Planning Attorney
An estate planning lawyer can help you envision a retirement where you keep getting richer even after you retire. Contact Cavallo & Cavallo in the Bronx, New York to set up a consultation.
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