Today, 51 percent of Americans aged 60 to 64 remain in the
workforce 1. For these and other Americans,
retirement doesn't mean
slowing down. But from
modifications in
schedules,
lifestyle, and
income, retirement almost always brings change. Retirement is something that many
people look
forward to reaching, but it can have its challenges.
Research shows that couples, in particular, may
face difficulties when transitioning to retirement as they adjust to new
roles and
routines 2.
Adjustments in spending and
saving habits may also be
required as couples move from
earned income to retirement income. The decisions you make to manage your
assets during retirement will determine the type of lifestyle you will enjoy. Taking time now to discuss your retirement
aspirations and plans can help you make better decisions for the future.
Timing
One important
decision is when you will stop working. For married couples in twocareer
households, this decision should be considered jointly. Will both spouses stop working at the same time?
Will one
or both spouses continue to
work to provide income? How you respond to these questions may affect when you start tapping into your retirement assets for income. Remember that
withdrawals from
tax-deferred retirement
accounts are typically taxed as
ordinary income and, if taken prior to reaching age 59 1/2, may be
subject to an additional 10 percent
federal income tax penalty.
Spending Habits
Do you expect to spend more or less
money during retirement? Do you envision spending your retirement traveling or spending more time at home? Your
answers to these questions will help determine how much income you will
need in your later years, which should
factor into the
financial decisions you make today.
Investing
Have you
developed an
investment plan to help
support the retirement lifestyle you desire? If you have successfully accumulated a retirement
nest egg that will support your desired lifestyle, you will
want an
investment
strategy that will help your assets
last and provide you with a steady
income stream.
Whether you are about to
retire or are already retired, preparation and
communication can help you make the most of your retirement years. Careful
planning and decision making now may result in the retirement you have always envisioned.
1) CNNMoney, August 30, 2004
2) The
Wall Street Journal, February 14, 2005
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