When you retire, where does your income come from? How frequently will you get “paid?” Can you choose when you’ll get social security income? In this episode of the Retirement Made Easy podcast, I’ll cover how income works in retirement and what you’re able to “customize” to you. I’ll also cover some listener questions regarding social security and who you should trust. Don’t miss it!

You will want to hear this episode if you are interested in…

  • [1:50] Where does your retirement income come from?
  • [14:16] Tom’s Question: How does the spousal benefit work?
  • [18:41] Tina’s Question: Should I invest in these two mutual funds?

Where does your retirement income come from?

Many people get paid every two weeks working a normal job. But when you retire, how do you decide how often to pay yourself or make a withdrawal? How do you decide when to withdraw from a Roth IRA, IRA, or after-tax brokerage account? How does it work with social security and pensions?

There are a lot of factors to consider. So we break it down into steps and help our clients map it out:

  • Step #1: How much income do you need every month to live the lifestyle that you want? If you don’t know, head to my website and check out my “Retirement Budgeting Tool.” Keep in mind that your expenses in retirement will likely be different than while you were working.
  • Step #2: What are your fixed income sources, i.e. social security/pensions?
  • Step #3: What gap is there between your fixed income sources and the amount you need to live comfortably every month?

We will come up with a game plan where you draw the money you need from Roth IRAs, IRAs, and brokerage accounts to fill that gap.

If someone needs $2,500 on top of social security and pensions, we might draw $500 of income from their Roth IRA, $1,000 from their IRA, and $1,000 from an after-tax brokerage account. We do this strategically to keep them in the lowest tax bracket possible.

All of that being said, many of our clients like to make withdrawals the first week and third week of the month. Others are fine with only getting paid monthly and prefer to receive their distributions in the same week. It comes down to personal preference (in most cases). However, your pension and social security pay out once a month.

Tom’s Question: How does the spousal benefit work?

Tom and his wife are both 62. Tom plans to continue to work while his wife would collect her social security benefit. When they both turned 67, Tom planned to retire and claim his benefit. He understood that his wife would get half of his social security income, or $1,400. In total, they’d receive $4,200 a month from social security.

Tom’s wife certainly can claim her benefit at 62. She can also claim her spousal benefit after Tom retires. However, if she claims her benefit at 62, she won’t get the full 50% spousal benefit when they’re both retired.

For every month that she collects her social security income before full retirement age, it reduces the spousal benefit. However, if both waited until they were 67, he could claim the $2,800 and she could claim the $1,400 spousal benefit.

Tina’s Question: Should I invest in these two mutual funds?

Tina asked my thoughts on a financial expert on YouTube. He claims that the best investment strategy for retirees is to own two specific mutual funds. Would I recommend that? I watched the video. This person isn’t a financial planner or financial advisor. He isn’t licensed to give financial advice at all.

Someone who is licensed—like me—can’t put out videos giving blanket advice to people. Anyone else can—but would you trust it? Would you take financial advice from that person? You can’t take this as real advice and implement it. I would never recommend that you put all of your money into two specific mutual funds at the advice of someone not certified to give it.

The bottom line? Be careful who you take advice from. Learn more in this episode of Retirement Made Easy!


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