Kiplinger's Money Power: Retirement brings a series of important decisions
BY SANDRA BLOCK Money Power
Sunday, February 03, 2013
2/03/13 at 4:16 AM
As you approach the day you begin the next phase of your life, you face a series of decisions that could spell the difference between a comfortable retirement and one fraught with financial stress.
Even if you have been managing your money for years, you may need professional help now. You can find certified financial planners in your area at tulsaworld.com/cfp
Original Print Headline: Key choices can frame retirement
- Take your pension as a lump sum or an annuity? Taking a lump sum allows you to invest the money as you choose; an annuity provides a lifetime stream of payments. A lump sum invested in an IRA may provide a higher return than an annuity, but you also risk outliving your money.
- Select a single-life immediate annuity or survivorship? If you're retiring without a pension, converting part of your savings into an immediate annuity is a way to lock in a monthly payment for the rest of your life. But you'll need to choose between a single-life option, which offers a higher initial payout, and an annuity that will provide income to a surviving spouse.
- Best strategy for portfolio withdrawals? Until now, your main focus has been saving as much as possible. Soon, though, you'll need to start taking withdrawals, using strategies that ensure your money will last for two or three decades. The order in which you tap your accounts could have an impact on your retirement income, and there's no one-size-fits-all answer, says Andrea Blackwelder, a certified financial planner in Denver.
- When to file for Social Security? For single people, the cost-benefit analysis is straightforward: Accept permanently reduced benefits by filing at age 62 or wait until full retirement age (66 for those born between 1943 and 1954) or even later in exchange for a higher monthly benefit. But couples have a range of options based on their life expectancies, earning histories and future survivor benefits, says Eleanor Blayney, consumer advocate for the Certified Financial Planner Board of Standards.
Sandra Block is a senior associated editor at Kiplinger's Personal Finance magazine. To send her a question or comment, go to tulsaworld.com/kiplingerfeedback.