Nearly three out of four Americans start their Social Security retirement benefits at age 62. What many people don’t realize is that there is a hidden penalty for some retirees who can’t resist early-bird Social Security benefits. Younger Baby Boomers will have to absorb a greater financial hit for claiming benefits at age 62 than older retirees.
Millions of retirees around the world are diligently searching for yield.
If you are one of them, you already know that it’s very hard to find.
The yield on the one-month U.S. Treasury bill was recently measured at the barely perceptible rate of .09%. Last summer, the yield on the 10-year U.S. Treasury bond hit an historic low of 1.43%.
As we’ve discussed in our last two posts, 4% should be a safe withdrawal rate for your retirement portfolio.
It’s only natural for retirees to want to invest conservatively, but hunkering down with a super-safe portfolio of bonds and cash can actually boost their chances of outliving their money. As we explained in our last post, retirees should be able to preserve their nest egg for at least 30 years if they limit their annual withdrawals to 4% of their accounts. If you missed that post, here it is:
What is the likelihood that I’ll outlive my nest egg?
Investors are likely to start asking some variation of that question when they are nearing retirement.
And it’s understandable since saving for retirement seems far more straightforward than figuring out how much you can spend in retirement, especially during turbulent times.