201509.14 Posted by Wealth Management
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As I plan for my approaching retirement, I’m making a list of the things to consider for retirement planning. There are a myriad of facets to be considered with regard to my pension benefits. Here are some of the items that I have been addressing …

First, I need to confirm my Social Security benefit. You can request a statement and view your benefits from the Social Security website at www.socialsecurity.gov. They provide a detail of your monthly benefit at various commencement ages based on your income history.

Next, I need to have a conversation with my Benefits Administrator regarding the following:

  • When can I start withdrawing benefits from my employer’s pension plan?
  • Must I cease employment, or can I begin to receive benefits if I have attained a specific age?
  • Is the benefit reduced if I commence benefits prior to the plan’s retirement age (which, in my case, is age 65)?
  • If I continue to work for my employer after age 65 (or retirement age) will my benefits increase?
  • If I have ceased employment and delay commencement of my benefits, how will my benefits change?

I then need to understand my payment options. My plan offers 4 possibilities: Joint and Survivor Annuity (if I am married), Life Annuity, Installment Payments, or a Lump Sum/Rollover to an IRA.

As I consider these payment options, I’ll need to review what federal and state taxes I owe on these payments (I’ll need to contact my tax advisor for this information). If I elect to receive a lump sum payment, how should it be invested? If I elect to receive installment payments from the plan, how should my account be invested to ensure that my account doesn’t run out of money too soon? If I die prior to the commencement of my benefits, what will my beneficiary receive from the plan? My beneficiary is my spouse. But if I wanted my beneficiary to be someone else, my spouse would need to waive their right to my benefit. My beneficiary information is up-to-date … is yours?

I also have some IRAs and a small 401k account from a former employer. Should these be combined and added to my pension plan or is it better to keep them separate which could provide more flexibility?

Finally, if my income needs once I retire are likely to be greater than the combination of my Social Security and pension benefits, then I suspect I will be looking for a part-time job. But, I’m not sure how income from a part-time job will affect my Social Security Benefit (if at all). It might it make sense to postpone either the Social Security or the pension benefit to maximize my retirement income.

If you find yourself facing many of these same questions as you begin to prepare for retirement, give us a call at 607-737-3790 to schedule time to speak with a Financial Advisor.

Contributed by Lauren Zell, Sr. Retirement Plan Manager in the Wealth Management Group at Chemung Canal Trust Company.

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401k age 65 benefits employment income installment payments IRAs joint and survivor annuity life annuity lump sum retirement social security