Optimizing Your Retirement Benefit

For a more secure financial future, see our
retirement planning guide

During retirement, you’ll rely on income from Social Security, your current retirement program (and any prior pension plans you’ve participated in), as well as your personal savings and investments. Maximizing the amount of benefit you’ll receive at retirement from all of your income sources involves a number of significant decisions on your part. Here’s a list of some of the issues you’ll want to think through prior to each decision, along with some helpful thoughts to consider.

How much should I save?
Save as much as you can without it costing you more than you’re saving. If that sounds odd to you, consider the following example. Paying off credit card debt at 18 percent interest and correcting the situation that put you in debt can have a more positive effect on your future retirement goals, than trying to save and reduce debt simultaneously. The sooner you do away with that 18 percent credit card interest each month, the sooner you’ll be able to start saving additional amounts for the long-term.
If you’re relatively debt free now, and are already saving, try to increase your savings rate. Do it gradually over specific time periods or when you get a raise.

Monthly Savings Required to Meet Retirement Goals
Current Age	30		35		40		45		50
Desired Retirement Income in Thousands	$36k	$48k	$36k	$48k	$36k	$48k	$36k	$48k	$36k	$48k
Current Savings	You need to save the amount in the corresponding cell below per month to reach your goal.
$0	$272	$363	$330	$440	$610	$813	$951	$1268	$1568	$2090
$5,000	$135	$193	$239	$332	$412	$563	$713	$966	$1262	$1726
$10,000	$96	$155	$199	$292	$370	$521	$668	$921	$1232	$1676
$20,000	$19	$77	$119	$212	$286	$438	$579	$831	$1130	$1575

How should I invest my savings?
Knowledgeably. Learn about investing. Most people invest too conservatively on the assumption that they will need the money tomorrow. If you know you are investing too conservatively, but are afraid to take more risk, do it gradually. For example, you could move 10 percent of your fixed income investments to equities over a one-year period.

When should I stop working (retire)?
This is a personal decision that requires a lot of thought, evaluation and planning on your part. Make sure you take the time to realistically evaluate what you’re giving up by retiring now, versus a month from now, a year from now, or five years from now.
You should also realize that there are often “key” dates that can have a dramatic effect on your benefits. For instance, are you fully vested? If not, when will you be? Are you in a pension plan that limits benefit accruals to a certain number of years of service (e.g. 30 years)? Is there a certain date when you’d be eligible to retire without the typical pension plan benefit reduction? When would another year’s salary be counted in your pension benefit calculation?

Check your retirement program information carefully before you make a potentially irreversible decision. You may even want to consider talking to a financial professional to help you weigh all of your options.

How should I take my benefits?
The most common options are annuities, lump-sum distributions and rollovers to IRAs .
Annuities guarantee you a stream of retirement income payments that you won’t outlive. Some annuities may provide for payments to continue to your beneficiary beyond your lifetime.

Lump-sum distributions can bring on tax consequences, and you alone become responsible for managing that amount efficiently in order to meet your retirement income needs.

Rollovers of lump sums to IRAs protect your tax-deferred status, and you can withdraw income amounts over time. IRAs offer you more flexibility, but you take on the investment risk and the chance that you’ll outlive the income that your IRA provides.

This information is provided courtesy of Securian Financial Services, Inc., member NASD/SIPC. 400 Robert Street North, St. Paul, MN 55101, 1-888-237-1838 2001-1126-850024