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New challenges face today’s workforce when it comes to retirement savings; longer lifespans have extended the time spent in retirement and brought a host of new challenges to light.
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Meanwhile, Social Security and Medicare are still facing impending cash shortfalls. OASDI maintains funding levels will run dry by the mid-2030’s, with Medicare Part A projected to be depleted in 2029.
So what can today’s workers and retirees do to stay afloat in retirement? Here are a couple ways to maximize retirement benefits.
Postpone claiming your Social Security benefits
The average Social Security payment for the program’s 61 million beneficiaries per month is $1,258, or about $15,000 a year.
Social Security can be claimed as soon as eligible recipients reach the age of 62, though individuals who claim early will receive reduced benefits. For those born in the 1960’s or later, in order to receive the full payout of benefits you must wait until age 67 to claim.
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However, if you want to maximize your benefits, you should wait even longer, an expert advises.
“The longer you can wait, the more you’ll get every year,” Darryl Rosen, founder of the Rose Advisory Group, told FOX Business. “Each year you delay past your full retirement age, your benefit increases by 8% until you reach age 70.”
Adjust health care plans
The costs of health care remain among Americans’ top financial concerns.
According to Fidelity, a 65-year old couple retiring in the current year will need an estimated $275,000 to cover health and medical expenses throughout retirement, representing a 6% increase over the year prior. However, health care costs for retirees have risen 70% since 2002, according to Fidelity’s analysis, and are only expected to increase moving forward.
It is important for American workers to plan for these expenses and factor in the costs of long-term care.
“When you sign up for Medicare benefits, be careful to choose the supplemental insurance plan that best suits your needs. And don’t forget to plan for long-term care. Those costs can demolish even the best-laid retirement plans,” Rosen added.
Modify your savings portfolio
It’s not enough to simply keep up with inflation, retirees need to make 2 to 3% above the inflation rate in order to maintain sufficient cash flow, Mark Fried, president of TFG Wealth Management, LLC and author of “Road Rules for Retirement,” told FOX Business.
One way to do that, Rosen said, is to keep some growth stocks in your portfolio. While it is prudent to move to a safer allocation strategy as you approach retirement, incorporating some growth stocks will also add extra value, he pointed out.
Fried noted the best way to mitigate risks to savings is to invest in a combination of products including bank, insurance and market-based products.
Hire a professional
Every individual’s situation and needs will be unique, so if you have questions, you can talk to a qualified financial advisor. Navigating changes in the tax or health care landscapes could provide additional challenges to Americans moving forward.