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Maximize your retirement income

This infographic is entitled maximize your retirement income. Keep in mind all of the sources you have to help cover expenses in retirement and not just the amount you saved and invested on your own. Reviewing and adjusting all sources may help create an income that lasts your lifetime. First, review your income sources. For households aged 65 or older, the most often key sources of income are: 33.2% from Social Security, 32.2% from Current Employment Earnings, 20.9% from Personal Retirement Accounts (including Traditional and Roth IRAs, 401(k)s, 403(b)s, pension plan payouts, annuities), 9.7% from Investments, and 4.0% from Other sources (see footnote number one). Then, maximize each source. This isn't a process that needs to be done in a particular order. Changes you make to any of these income sources could potentially benefit your whole strategy. Income source number one Social Security. Delay taking your benefit. Maximize your monthly checks by waiting until after your full retirement age to collect Social Security, especially if you're in good health. Hypothetically for every year you delay, your benefit could increase between 7-8% (see footnote number two). At age 62, which is the earliest you can collect, your annual benefit is $18,000. At age 66, your full retirement age, your annual benefit is $24,000. If you delay until age 70 your annual benefit is $31,680. Your monthly benefit stops increasing once you reach age 70 (see footnote number three). Will you have lifetime income sources to help cover your essential retirement expenses? Consider annuities that can provide for guaranteed monthly income (see footnote number four). Income source number two Current Employment Earnings. Consider remaining in the workforce. More than ever, retirees are working or starting their own businesses. The percentage of those aged 65 years or older who are currently working is 24.7% men, and 16.4% women (see footnote number five). Income source number three Personal Retirement Accounts. Take full advantage of saving. Automate your saving contributions, contribute enough to meet any employer match and consider opening a Traditional IRA or Roth IRA. Here are the contribution limits for the 2021 tax year (see footnote number six). For a 401(k), if you are less than age 50, you may contribute up to $19,500. If you are age 50 or older, you may contribute up to $26,000. For a Traditional or Roth IRA, if you are less than Age 50, you may contribute up to $6,000. If you are older than Age 50, you may contribute up to $7,000. The Merrill Personal Retirement Calculator can help you determine your retirement savings goal and see if you're on track. Income source number four Investments. Develop a withdrawal strategy. Consider your spending needs and withdraw only what you need from your retirement pool. Income source number five Other. Evaluate your property. Downsizing to a smaller residence can boost your cash flow. If you have a vacation house or extra space at home, think about renting it out. Discover more tips to help boost your retirement savings whatever your age. Merrill, a Bank of America company.
Footnote 1 Social Security Administration, Income of the Aged Chartbook, 2014 (latest data available as of November 2020)

Footnote 2 Calculations based on Social Security Administration data, November 2020

Footnote 3 Social Security Administration, 2020

Footnote 4 Guaranteed income may be based on purchasing "optional income benefit" riders available for an additional cost. Annuity contract and rider guarantees, or annuity payout rates, are backed by the claims paying ability of the issuing insurance company. They are not backed by Merrill or its affiliates, nor do Merrill or its affiliates make any representations or guarantees regarding the claims-paying ability of the issuing insurance company.

Footnote 5 Bureau of Labor Statistics, Current Population Survey, 2019

Footnote 6 IRS, 2020

Investing involves risk. There is always the potential of losing money when you invest in securities.

Asset allocation, diversification, and rebalancing do not ensure a profit or protect against loss in declining markets.
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