4 tips for a better retirement

For many people, Social Security payments for retirement will equate to a significant part of their income. While this income may only measure up to about a quarter of an individuals wages before retirement, it can be a very important aspect of a comfortable financial retirement.


However, the best way to maximize Social Security benefits is to wait until the age of 70 to file for these benefits. This is typically when the amount of the benefit will max out. It is, however, important to determine how a person can bridge the retirement financial gap, and wait as late as possible to file for Social Security benefits. Here are a few things to keep in mind.




Since Social Security benefits only equate to about a quarter of a person’s working wages, it wouldn’t be too hard to make up that difference. Some individuals have jobs that allow them to stagger their workweek to be on a part time schedule. In other instances, a person may want to look for a part time job for a short period of time to make up this difference until filing for Social Security benefits.


File and Suspend


For couples looking to maximize their Social Security benefits, the higher earning spouse can file for Social Security benefits and then suspend payments. The spouse can then file for spousal benefits, which equate to about half of what the higher earning spouse would be getting in benefits. This allows both of them to wait until the age of 70 to file for full Social Security benefits, when those benefits will be worth the most.


Bigger Withdrawals


Larger withdrawals from an investment portfolio can make up the difference until Social Security benefits max out. Once the benefits begin to come in, then an individual can lower the amount of withdrawals they make from an investment portfolio. However, it’s best to factor in the cost of inflation with these withdrawals. It’s also important to consult with a financial planner to determine if this is a good idea for filling a financial gap.


Withdrawal from Pre­-Tax Accounts


Accounts like IRAs and 401(k)s can be withdrawn from when a person is in their 60’s. These accounts will represent a very small tax burden. If a person were to wait until they reach the age of 70 1/2 to withdraw from pretax accounts and receive Social Security benefits, their tax burden may be higher, and they may find that they have more annual income than is required. Since pretax accounts have to be withdrawn from by the age of 70 1/2, it’s best to start early. This reduces an individual’s tax burden. Once Social Security benefits kick in, the reduction from these pretax accounts can be smaller, thus allowing these accounts to last for retirement.


If you’re not exactly sure how to handle this, programs like Captain  Cash can help. These interactive educational programs can help a person minimize tax burdens and better execute a better retirement plan.