Once you and your spouse retire, you’ll have some decisions to make — decisions that could affect your quality of life in your retirement years. What are these choices?
Here a few of the most important ones: How much should you withdraw from your retirement accounts? By the time you retire, you may have contributed for decades to an IRA and a 401(k) or similar employer-sponsored retirement plan. But once you retire, you’ll probably need to draw on these accounts to help pay your living expenses. Consequently, both of you will need to be sure that you don’t withdraw so much each year that you risk running out of money later in your retirement. One common guideline is to aim for an annual withdrawal rate of 4%, but everyone’s situation is different based on age, pre-retirement income, lifestyle, health, travel plans and other factors. (Once you turn 73, or 75 if you were born in 1960 or later, you will have to take certain amounts, based on your age and account balance, from your traditional IRA and traditional 401(k) each year.)
When should you take Social Security?The answer to this question depends on many factors, such as your age and other sources of income. You can take Social Security as early as age 62, but your monthly payments will typically be bigger if you wait until your full retirement age, which will be age 67 if you were born in 1960 or later. And if you can afford to wait even longer, your payments will “max out” when you reach age 70. Your decision on when to take Social Security can affect your spouse — and vice versa. If the lower- earning spouse claims Social Security before their full retirement age — again, age 67 — their own retirement benefit and any potential spousal benefit will be reduced. (Spousal benefits are given to the lower-earning spouse if their full retirement benefit is less than half the other spouse’s full retirement benefit.)
