Tags: Brooks | Social Security | retire | stocks

USA Today's Brooks to Retirees: Wait Before Claiming Social Security

By    |   Thursday, 04 June 2015 10:00 AM

Rodney Brooks, in his last effort as retirement columnist for USA Today, offers tips for your golden years. Here are some of them:
  • Wait until you're 70 to claim Social Security if you can afford it. "For every year you wait after age 62, your benefits increase by about 8 percent," Brooks writes. "Even if you wait only until 67, there's a big difference. You increase benefits by about 30 percent from what you would have received at 62."
  • "Don't be afraid of the stock market." Remember that stocks historically return about 9 percent a year, compared with 5 percent for bonds. You may need that additional return to finance your lifestyle and health needs in retirement. "Consider this: $10,000 invested in stocks 20 years ago would have been worth $65,484 at the end 2014. The same amount invested in government bonds would have brought you $31,058," Brooks explains. "Enough said."
Meanwhile, many studies show we're financially unprepared for retirement. So what's preventing us from preparing better?

A "big one is certainly the illusion of time," Scott Thoma, investment strategist for Edward Jones, tells Fox Business Network. In other words, we think we have more time than we actually do to build a retirement kitty.

"Many also don't understand how little steps can make a big difference," he notes. "For example, the average tax refund is about $3,000 a year. Investing this, every year over 30 years with a 7 percent return, could be $300,000 over 30 years."

Inertia also is an obstacle. "Just a problem with getting started," Thoma argues. "This is why steps such as auto-enrollment in employer-savings plans is important, automatically building a habit of savings."

Even if you are in the midst of paying off debt, "at least contribute enough to achieve the company match," and then worry about debt, Thoma advises.

He's referring to 401(k) plans. We are repeatedly advised by retirement experts to max out contributions to those plans. But many of us work at companies that don't have them, or we don't even work for a company full-time, freelancing instead.

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Rodney Brooks, in his last effort as retirement columnist for USA Today, offers tips for your golden years.
Brooks, Social Security, retire, stocks
Thursday, 04 June 2015 10:00 AM
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