Page 7 - Senior Times South Central Michigan - March 2019- 26-03
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Senior Times - March 2019
Page 7
payables quickly, whereas others might want to target those debts with the highest interest rates. Starting with the smaller ones first can create a sense of accomplishment and lead to increased success going forward.
because saving money was not part of their monthly plan. Some will struggle in retire- ment because of unexpected emergencies and other challenges, but even in retirement there are potentially new career options. Working to the senior’s benefit however, is that the house is generally paid for, or they are downsizing, and the cost of insurance is now switching primarily to Medicare.
The age at which you retire can affect your benefit amount greatly.
Financial guru Dave Ramsey calls this
the Snowball method and suggests listing your debts from smallest to largest. Once you’ve paid off the smallest, throw that added amount toward the next one, all the while still paying at least the minimum required on each of the other outstanding debts. According to the Journal of Consumer Research it works, and ultimately, people are more likely to stick with their debt payoff goals.
Since the Social Security system was not intended to be the only source of living in retirement, there are incentives to increase the amount of monthly take home benefit by being willing to work just a few months to years longer. As an example:
You’ve probably heard time and time again to ‘Pay yourself first.’ Your financial insti- tution is more than willing to help you with this as well. In this day of automation you can set up a recurring transfer from your checking account to your savings without even having to do the work. That $20 (or other amount)
is regularly building and you are setting up security in case of emergencies or even retire- ment without having to do any of the work. Many of you have probably set up automatic payments for your other household bills; this can be one of those that regularly occurs as well.
them saving habits into their future. Maybe it’s a no-spend challenge. Could
If you retire at age 66 in 2017, your max- imum benefit will be $2,687. However, if you have reached age 67 or older, you will be granted credits for your deferred retirement. In 2017, deferred retirement earns an addi- tional 8% per year over full retirement age, up to age 70, meaning that if you retire at age 70 in 2017, your maximum benefit would be $3,538 – 24% higher than those for someone retiring at 66 with the same earnings history. On the other hand, should you decide to col- lect benefits before you reach full retirement age, your benefits will be reduced to account for the additional years over which total ben- efits must spread. For example, if you were born in 1960 or later and your full retirement age is 67, retiring at age 62 would reduce your payout by 30%. See page 24 for the retirement age schedule.
Set a savings goal. You choose. How about 10 percent? If you can live on 90 per- cent of your take home pay then you know you are always living within your means and you will be better able to handle a financial emergency, or a change in income, if that hap- pens. The number above is strictly a number to start with. You must decide what you are willing to commit to.
you give up your coffee at the drive through for a month? How about bringing lunch to work for a month? Maybe it’s only ‘free’ entertainment options for a month; you’d be surprised how many opportunities there are in our area. The fun part is to change it up. I find that eating in, rather than eating out can have a significant impact on the budget but the reality is that I do enjoy the socialization time with friends. So while this challenge is up on the table from time to time I know that I could not sustain it and enjoy what I do at the same time. The point is to change it up
How about creating monthly challenges? The best part is that you’ll be turning fun challenges into healthy savings habits. Engaging your children and grand- children in this process can also help to teach
in such a way as to make it work for you and your family.
You can visit the Social Security Administration online at https://www.ssa. gov/benefits/retirement/v to determine your monthly benefit in retirement and so much more.
The final goal of your working career is most likely retirement. And while many retire and travel the world others have found that the option is not even on the table. Partially
Danford M. Byrens
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