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Using guaranteed income, like Social Security, to pay everyday bills may save me from withdrawing from retirement accounts before I’m ready.
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Given the work that needs to be done to secure Social Security benefits for the future, it makes sense to have other sources of guaranteed income.
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Allowing retirement accounts to grow after retirement could help you guard against inflation and help cover the cost of health care.
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The $23,760 Social Security bonus most retirees completely overlook ›
After decades of saving and investing, it’s time to make tough retirement decisions. It’s up to you to determine whether you want to downsize your home or relocate to another state. It’s you who’s responsible for coming up with a spending plan that ensures your money will be available for as long as you need it. And it’s you who decides how to use different sources of retirement income, including Social Security.
You’re not alone. Nearly nine out of 10 Americans age 65 and older receive Social Security, meaning there are millions of others making the same decisions. I’ve planned how I want to spend Social Security, and here’s what I came up with:
Since I tend to be financially conservative, I’ve decided to let my retirement accounts ride as long as possible. I’ll begin taking required minimum distributions (RMDs) by the time I’m 75, but until then, the goal is to live on guaranteed income, and that’s where Social Security comes into play.
Guaranteed income refers to a steady stream of income you can rely on to cover living expenses in retirement. While I have no way of knowing whether Congress will come up with a way to shore up Social Security or if I’ll receive as much as I expect by the time I begin collecting benefits, I still consider it part of my guaranteed income plan. Here are some other common sources of guaranteed income:
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Bonds
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Some types of life insurance
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Part-time employment
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Annuities
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Pensions
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Stocks
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Real estate
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Royalties
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Home equity (when needed)
I am counting on Social Security, a pension, royalties, and — since I never want to stop working entirely — part-time employment. This is the money I’ll use to pay living expenses and to cover some of the fun things I suspect my husband will want to do after he finally retires.
When I was younger, I imagined throwing everything — including guaranteed income and withdrawals from our retirement accounts — into a single pot and using that money to live. It was my favorite compound interest calculator that changed my mind.
