John M. Hoffman
Is John Retiring? NOT JUST YET...
Sources of Income:
Once you know what your budget is, the next thing to look at is your sources
of income outside of what my accumulated savings can generate.
In my case this is simply social security income (for both my wife and
myself). Let’s say that I will collect $24,000 and my wife will collect
$12,000. A total of $36,000 for the two of us; but buyer beware – if one of
us dies, the smaller amount will go away. As such, I will plan on only
receiving $24,000 in annual social security benefits (the other $12,000 will
have pensions (particularly government workers). It is important to get a
good handle on just what benefits that retirement plan will provide. Some
plans even provide continued health insurance. Other sources of income to
Rental or royalty income. For those folks who own
rental property or perhaps mineral rights.
Part time earnings. Many people contemplate
continuing to work part time into their retirement. Be careful not to
plan on doing that forever as many times your health might not allow
that - or you might simply not want to do it forever..
Don't forget that social security is a complicated arrangement. There are
opportunities to commence collecting benefits early but BUYER BEWARE of the
pitfalls of such - essentially a reduced benefit for lifetime. There is also
the opportunity to get larger benefits if you delay commencing collecting
benefits (only until age 70). Essentially this comes down to a question of
how long you think you or your spouse is going to live. If you think you
will live to a long time, and you can make it happen, you might think of
delaying commencement of benefits. Also, look carefully at spousal benefits
and how you want to maximize those. As mentioned above, a married couple
might be collecting two benefits when both are alive but that quickly
changes to one benefit (the larger one) when one spouse dies.
Another pitfall is that if you do commence collecting your social security
benefits early (before your normal retirement date - age 66 and 4 months for
John), you are limited as to how much you can earn (working not investing)
without giving back the social security benefits.