How to Ace Retirement

AARP and the Ad Council introduced a web site www.AceYourRetirement.org to encourage people to take action to save for retirement. The savings promotion effort also has a dedicated Twitter hashtag: #AcingRetirement. Below are some suggested strategies that Ace Your Retirement suggests to prepare for retirement:

  • Consider waiting until full retirement age (FRA) to claim a Social Security benefit so that it is not permanently reduced. If you delay further, up until age 70, the benefit will increase by 8% for every year that you wait.
     
  • File for Social Security benefits three months before you plan to start taking them. To get an estimate of how much you will receive, create an online account at https://www.ssa.gov/myaccount/.

  • Create an estimated retirement budget. Calculate your household expenses today and project what they will be after retirement. For example, commuting costs will disappear but travel and entertainment expenses might increase.

  • Add up your retirement savings accounts (e.g., IRA, 401(k), taxable accounts) and multiply the total by 4% (.04) to determine the amount to withdraw annually from these accounts to last about 30 years.

  • Compare estimated retirement expenses with anticipated income from Social Security, a pension, 4% investment withdrawals, and/or other income. If you have a shortfall, working longer, downsizing, or adjusting lifestyle expenses.

  • Organize your financial records, including an inventory of documents and where they are kept (e.g., wallet, home files, safe deposit box). Consider making “soft copies” (e.g., scanned documents on a flash drive or in a cloud server).

  • Take advantage of available cost-saving opportunities such as senior discounts on purchases and entertainment costs (e.g., movie tickets) and income and/or property tax reductions.

 

The Ace Your Retirement web site is a good starting point for people who want a retirement savings action plan. For more impact, it can be combined with the Ballpark Estimate, which helps people determine how much they need to save to support their desired lifestyle.  Both resources provide a personalized action plan to help users ace retirement.