The Three Pillars of Retirement: Pension, Social Security, and Personal Investment Income
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Social Security

  • toomeyinvest
  • Retirement, Social Security
  • October 21, 2024

The Three Pillars of Retirement: Pension, Social Security, and Personal Investment Income

We all have plans (or dreams) to retire one day. While dreams are important, the foundation for retirement is just as critical. Will you have enough money to fund your retirement? Establishing clear personal financial goals and working with a knowledgeable financial planner can help turn those dreams into a reality.

Three Types of Retirement Income

For many Americans, there are three elements of a solid retirement planning strategy: pension income, social security income, and personal investment income. In this blog, we’ll provide an overview of these three types of income and how they contribute to saving for retirement.

Pension income. Once a common benefit among U.S. employers, traditional pensions in the United States are on the decline, with more companies switching from providing direct pensions to outsourcing the process to defined contribution plans such as 401Ks.

According to the Bureau of Labor Statistics using data from March 2023, 73 percent of civilian workers had access to retirement benefits. The take-up rate (defined as the percentage of workers with access to an employer-sponsored benefit who choose to participate) for retirement benefits was 77 percent.

Social Security. While social security can provide some income for day-to-day living, living on social security alone is nearly impossible for people in many parts of the country.

“A popular rule of thumb is that you’ll need about 80 percent of your pre-retirement income to maintain your current lifestyle. Unfortunately, Social Security benefits supply only about half of that if you’re an average earner,” according to SmartAsset.com. Individuals still working can check their estimated benefits on the Social Security website, and see estimates of their benefits at early, standard, and late retirement ages.

Personal investment income. Personal investment income is money earned from the buying, owning, and selling of investments. These investments not only provide capital for living expenses during retirement, but they also generate other income streams, including capital gains, dividends, and interest on the investments from products such as corporate or government bonds or CDs. Designing a long-term investment strategy aligned with your goals is a key element of successful asset management.

Not Everyone Qualifies for All Three

Not all Americans are entitled to or have access to all three of these income vehicles, which means it’s even more important to consult with a knowledgeable financial planner who can provide alternatives to ensure plan stability. This substitution begins with a comprehensive needs analysis, enabling investors and advisors to construct a proposal that highlights the strengths, weaknesses, or limitations their plan circumstances may present.

Choose an Experienced Retirement Planning Partner

Toomey Investment Management, Inc. is a Wallingford, Connecticut-based independent registered investment adviser (RIA) advisory firm that offers clients expertise in independent portfolio management, tax planning and preparation, risk management, and estate planning. Their comprehensive services aim to create a durable, effective wealth management strategy customized to client needs.

A prudently designed retirement income plan is crafted to client specifications with a central focus on flexibility and durability. Whether you’re focused on building wealth, saving for retirement, or securing long-term income, our team is here to help.

When we partner with clients, there is a shared interest in the longevity of the plan. We tell our clients on day one: this is a business of variables, and we aren’t doing our jobs if the product we provide isn’t a durable one.

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  • toomeyinvest
  • Social Security
  • February 4, 2022

Social Security Tips for Couples

There’s so much that goes into planning for retirement and ensuring you have stability in those later years so you can enjoy them free of financial worry. What’s especially unique about planning for retirement is that no one’s situation will be the same. In terms of social security benefits, it’s worth taking the time to work with a trusted adviser who can help you make those important decisions early, so you can retire with confidence.

The thing that’s great about social security is that it’s inflation-protected. So, as the cost of living increases, so will the benefits you can receive when you collect. But it’s not as easy as working until you’re in your 60’s and then receiving the maximum benefit.

There are many factors to consider and these can change based on your marital status. Here are a few key social security tips for couples in 2022.

Understand Spousal Benefits

Whether you are married or single can play a significant role in how you claim social security benefits. It’s important to understand the rules of spousal benefits and how claiming at just the right time and with a strategic plan in place could change your benefit outcome. If you’re single, only your specified benefit initiation date must be considered. Longtime domestic partners are not considered married couples. However, when you are legally married you have a few options to consider. These are based on each person’s claim date and benefit amount and will mean choosing whether or not you should claim based on your own work record, or electing up to 50% of your spouse’s benefit amount.

Married couples should be working together and coordinating their election options when it comes to social security benefits.

Should You Work Past 62?

Another big question that comes about when you are starting to plan for retirement is at what age you will retire. Again, so many different factors can play into this decision. Things like long life expectancy and health can make it easier to delay claiming benefits. Every year past age 62 and up until 70 years old, there is an increase in the amount of benefits you can receive. Of course, this isn’t an option for everyone and the concern of outliving your benefits is also on the table. It’s important to have an open conversation with your spouse and to speak with a professional to guide you through the process.

Planning for Survivor Benefits

The one topic no one really likes to talk about but is essential in this decision-making process is how death may impact the benefit of the surviving spouse. If your wish is to provide the maximum benefit for your wife or husband after you pass then delaying when you start claiming social security can provide them with a higher benefit.Ready to start working on your retirement planning? At Toomey Investment Management, Inc. we want to help you and your family. We work to effectively optimize your financial world.

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