Retirement Toolkit

After years of hard work, most people are eagerly anticipating retirement. Choosing when to retire is an important decision and involves a number of issues you may want to consider in your retirement planning. The more you know before you start making decisions, the better off you will be in retirement. This retirement savings toolkit is brought to you by the Department of Labor, the Centers for Medicare & Medicaid Services, and the Social Security Administration. These federal agencies have different levels of involvement in planning and security in retirement.

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The retirement savings toolkit includes a list of articles and online tools to assist in making decisions and planning for your retirement. The retirement savings toolkit also includes information on how to contact us with your specific questions. It is important to get started as soon as possible with planning. This ensures you are well informed to make timely decisions and, if necessary, make changes while you still have time before retirement. The timeline and retirement savings toolkit below can help you plan for the kind of retirement you want.

Timeline for Retirement Planning

Timeline for Retirement Planning

Retirement Saving Plans

A retirement savings plan offered by your employer is an essential part of your retirement income and security. Ideally, enroll in a 401(k) or other similar types of retirement plans offered by your employer, and plan to contribute as much as possible. If your employer also contributes to the plan, find out how much the employer match is and how much you need to contribute to get all of it. As noted in the timeline, at age 50, you can begin making additional contributions that allow you to catch-up and increase the retirement savings.

Don’t touch your retirement savings. The longer you leave the money there, the more time it has to grow. Taking money out of the plan before you reach age 59.5 results in the loss of some of the principal and interest. In addition, many people will also have a tax penalty, further reducing the amount actually received. On or before reaching the age of 70.5, a minimum distribution must begin, or penalties may also be assessed.
It is also important to understand how your plan works and what benefits you will receive. Learn about the different features or provisions of your plan. Check with your human resource department, the employer, or with the plan administrator if you have any questions or concerns. Take the time to learn about the rights and responsibilities you have under the federal law that governs your plan, the Employee Retirement Income Security Act (ERISA).
While you are working, take a look at how much you have saved for retirement, how much you might receive in Social Security benefits, and what other assets you have. Also, look at your current expenses and think about what they will be in retirement. For instance, your work-related costs will likely go down, while health care costs likely will increase. Starting now can help you make changes while there is time before you retire to make up any savings gap or adjust your goals. Make it a habit to review plans on an annual basis and to discuss any changes you need to make to maximize your retirement savings.

Social Security

The Social Security Retirement Toolkit and Social Security Benefit Planners are essential in making a determination as to the optimal time to start receiving benefits. In utilizing the information from the Social Security Benefit Planners and waiting until full retirement age, you maximize your benefits. Extending time beyond full retirement age provides the option to increase benefits by about eight percent a year, up to seventy years of age. In the Social Security Retirement Toolkit, information on the reduction in benefits if you claim before full retirement age allows you to weigh your options.
Social Security’s full retirement age depends on the year in which you were born. If you were born in 1942 or earlier, you are already eligible for your full Social Security benefit. If you were born between 1943 and 1954, your full retirement age is 66. If you were born between 1955 and 1959, your full retirement age increases gradually until it reaches age 67 for those born in 1960 or later. The Social Security Retirement Toolkit and Social Security Benefit Planners are helpful in making the best decision based on your age and financial needs.
If you claim benefits before your full retirement age and continue to work, your income will be subject to the retirement earnings test, and your benefits could be reduced if your earnings exceed a certain limit. However, once you reach full retirement age, your monthly benefit will be increased permanently to account for any months in which benefits were reduced. The retirement earnings test no longer applies after you attain your full retirement age, and your benefit will not be reduced no matter how much you earn. After benefits begin, any cost-of-living increases will be included in an annual adjustment to the amount of the benefits.