3 Legged Stool Retirement Approach

Deciding when to claim Social Security benefits is a crucial decision for retirees looking to maximize their retirement income. Eligible individuals can begin receiving benefits as early as age 62, but waiting until full retirement age (FRA) age 66 (or 67 for those born in 1960 or later) can result in benefits that are approximately 30% higher. Further delaying benefits until age 70 increases the payout by an additional 24% to 32%.

Not only will your monthly benefits be higher, but cost-of-living adjustments (COLA) will also be based on these increased amounts, providing even more financial security. Married couples may have additional Social Security claiming strategies available, depending on their unique financial situation. In some cases, it might be advantageous for one spouse to claim benefits early while the other delays, or for both to delay benefits if they have sufficient income from other sources. 

Everyone has a unique vision of their dream retirement, whether it's traveling, relocating to a new area, engaging in charity and community service, or pursuing a passion like starting a business. Whatever your retirement goals may be, it’s essential to plan ahead to ensure your retirement savings last throughout your lifetime. At Haven Financial Solutions, we help clients build a personalized retirement plan to make sure their nest egg supports their dream lifestyle. 

How and when you start saving for retirement plays a crucial role in shaping your retirement outcomes. Your success in building wealth for retirement depends on factors like debt management, lifestyle choices, employment status, and personal goals. At Haven Financial Solutions, we help clients assess these key factors, set realistic retirement goals, and develop personalized financial strategies to achieve their financial objectives. Our expert advice ensures that you stay on track to secure a comfortable retirement.  

Here are some sources of Americans retirement savings:

• Social Security

• Pensions, including those from previous employers

• Retirement accounts, such as individual retirement accounts (IRAs), 401(k), 403(b), 457 plans, and other workplace retirement plans

• Annuities

• Interest in a business 

• Income from rental properties 

• Stock options or restricted stock units from their employer

• Taxable investment accounts

You're in control of your financial future: Unlike employees of large companies who might have employer-sponsored plans like 401(k)s, Small Business Owners are solely responsible for their retirement planning. Establishing a retirement plan, such as a SEP IRA, Solo 401(k), or SIMPLE IRA, empowers you to build wealth independent of your business, while allowing you to take advantage of some of the biggest tax deductions available to your business. This can be crucial if your business plans don't materialize as expected. 

Other benefits of establishing retirement plans for your business include: 

• Mitigating financial risks and securing your future: Relying solely on your business for retirement can be risky. Business success isn't guaranteed, and unforeseen circumstances like illness or market downturns could jeopardize your financial security. A dedicated retirement plan creates a safety net, providing a reliable source of income during your retirement years, regardless of how your business fares.

• Tax-deductible contributions: Many retirement plans, including traditional IRAs, Solo 401(k)s, SEP IRAs, and SIMPLE IRAs, allow you to deduct contributions from your taxable income, reducing your current tax liability.

• Tax-deferred growth: Your investments grow tax-deferred within the account, meaning you don't pay taxes on investment gains until you withdraw the money in retirement. This allows your savings to grow faster than in a taxable account.

• Potential for tax-free withdrawals: If you choose a Roth option like a Roth IRA or Solo Roth 401(k), you contribute after-tax dollars, but your qualified withdrawals in retirement are completely tax-free. 

• Attract and Retain Top Talent: A retirement plan, especially a 401(k), is a highly sought-after benefit by employees. Offering this can make your business more attractive to potential employees and increase the likelihood of retaining current ones. 

• Business Owner's Retirement: A retirement plan allows the business owner to save for their own retirement as well, ensuring their long-term financial well-being. This can be crucial for a smooth transition into retirement.