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Question for the Money Doctors

Question submitted on Jun 2, 2014.

Question

I am one year away from full retirement when I turn 66.
I have IRAs and cash saved.
Some of the IRAs are in bank money markets with less than 1% interest
I have been afraid to put the money in stocks.
Do you have any suggestions to get this money working harder for me?

Regards

Bruce S.

Answer

I assume what you mean by full retirement at age 66 is for Social Security purposes. Just because you reach full retirement age doe not necessarily mean you should be claiming your Social Security benefits. Your benefits will increase by 8% for every year you wait. You reach the maximum amount at age 70. You can ask the Social Security Administration to run the numbers for you to illustrate the amount of your benefits if you waited.

The break-even is between age 78-82. If you are confident you will live to at least age 82, you will come out ahead.

Social Security planning is important, otherwise you will short yourself some benefits.

If you continue to work, you can increase your benefits by 1% per year depending upon your income.

Regarding your IRA investments, you need to review your asset allocation. You should not be afraid of stocks, but you should be better informed by them.

There is a lot of resources to help educate yourself about this. Please take a look at the many articles on our website here.

You should invest in a consultation with a CPA/PFS to review your situation and help you do the best planning.


For additional information visit http://www.360financialliteracy.org/