By Diane DeStefano

When I was young I thought that money was the most important thing in life; now that I am old I know that it is ~Oscar Wilde

With pension plans becoming more and more rare, I find that I’m meeting with individuals and couples who, while working hard to pay their regular monthly expenses, helping to put their kids through college, and assisting financially with supporting elderly parents, fall short on saving for their own retirement. Many individuals approaching retirement continue to invest the bare minimum (often times just up to the match) into their retirement plans, and assume that, along with Social Security, it will be enough.

That why it’s so important to understand your options before you decide to retire….


– A good first step is to visit Social Security’s website at, and set up a logon and password under the tab “my social security.” This will allow you to access your personal social security benefits statement. This statement will help you to gauge, realistically, what your benefits will be in retirement, and could prove to be very eye opening. Social Security benefits were meant to be a supplement to your retirement income, rather than your sole means of income in retirement.

You have the choice of taking social security payments early at age 62, at full retirement (determined by your year of birth) or taking delayed retirement benefits.

Several years ago, we used to tell individuals that if they took their retirement benefits early, at age 62, they could expect to receive about 80% of the full retirement benefit. Now, with more and more baby boomers moving into retirement, this percentage is changing. As an example, I’m at the end of the baby boomer era, yes it’s true. My full retirement age is 66 years and 10 months. If I decided to take early retirement at age 62, I would receive only 70.8% of the full retirement benefit. If I wait to retire at age 65, I would receive only 87.8% of my benefit. I will have to wait until my full retirement age to receive 100% of my benefit.

If your health and circumstances allow, consider prolonging your retirement beyond full retirement age. If I elect to work until age 70, I would receive 125.3% of my benefit by waiting those extra 38 months to retire. Beyond age 70, there are no more incentives to wait to take your Social Security benefits.

How Confident Are You?

Whether you elect to take early retirement, full retirement, or delayed retirement, the Social Security web site has benefit calculators, a retirement tool kit and provides assistance to help you to determine the best time to start receiving benefits. Data from Social Security indicates that one in three retirees who retire at age 65 will live to age 90, and one in seven will live to age 95! So, your monthly benefit is important. My best advice is to wait as long as possible to begin collecting social security, if at all possible. Most people automatically think about taking Social Security at 62, but this may not be the best decision. If you find you haven’t been able to build up your retirement accounts to cover your monthly budget, then make a plan now to either save more, work longer or both.

Even if you decide to wait to take your benefits until full retirement age or beyond, remember you can still file for Medicare benefits at age 65.

Other important factors to remember:


– Know how much you will need on a monthly basis in retirement. Be realistic and track your expenses over time prior to retiring. Look at all of your assets – retirement plans, social security, savings, investments, real estate. How much income will these assets generate on an annual basis? With the income from these assets, and social security provide you with enough to cover your monthly budget or will you have to dip into the principal of your assets each month?

One reason for the gap between workers’ expectations and retirees’ experience is many Americans find themselves retiring unexpectedly. Large percentage of retirees leave the work force earlier than planned (50 percent in 2015). Many retired earlier than planned citing health problems/disability (60%), downsizing/closure (27%), Caring for a spouse/family member (22%), Change in required job skills (10%) or other work-related reasons (22 percent). Of course, some retirees mention positive reasons for retiring early, such as being able to afford an earlier retirement (31%) or wanting to do something else (17%).

If, as mentioned earlier, you live 30 years in retirement, have you saved enough?


– I’m sure you’ve read this in my column many times before, but it’s so important that I’ll repeat it here again. Be sure you have 6 to 8 months of living expenses in a separate, liquid account to cover those unexpected emergencies – whether they are medical, home, or personal emergencies. Liquid means invested in a checking account, savings account, money market or a short-term certificate of deposit so that it is available should an emergency arise. Having liquidity prevents you from having to sell an investment asset or retirement asset to pay for an emergency. This could result in capital gains/losses on your investment account or could result in taxable income if sold from your retirement account.

Budgeting, creating an emergency fund, comparing your Social Security benefits, and saving for retirement, will put you on the the road to a successful and comfortable retirement.