Financial Corner: Give yourself some ‘Paychecks’ for Retirement

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Hopatcong Lake Regional News is pleased to partner with local resident John-Paul Tancona as our financial advisor with Edward Jones. With over 20 years of experience in this industry, he offers free tips and welcomes your no obligation questions as a resource to our community.

During your working years, you’ve probably met the costs of living through your salary. But once you retire, where will the money come from? Is there a way to give yourself a “paycheck” for retirement?

There is indeed – but you’ll have to do a good job of managing your available income sources. Here are some moves that can help:

  • Accept dividends and interest payments. Instead of automatically reinvesting all your dividends and interest payments into your portfolio – which is an excellent strategy for building wealth – you might want to begin receiving these payments as part of your income. Keep in mind, though, that companies can lower or discontinue dividends at any time. However, it’s also true that some companies have consistently paid, and even increased, dividends over many years, and even decades.

  • Choose an appropriate withdrawal rate. Once you’re retired, you’ll likely need to begin withdrawing from your investment accounts. But you’ll need to avoid taking out too much early in your retirement – you don’t want to risk outliving your portfolio. For many people in their mid-60s, a 4% annual withdrawal rate is a good starting point, but everyone’s situation is different, and your ideal rate will depend on several factors: your age, the size of your portfolio, other sources of income, and so on. Once you turn 72, you’ll be required to take at least a minimum amount from your traditional IRA and 401(k), but you can choose to withdraw more, if necessary.

  • Maximize your Social Security. You have significant control over the amounts you’ll receive from Social Security. You can begin taking these payments at age 62, but they will be much larger if you wait until your full retirement age, which will likely be between 66 and 67. (You will receive the maximum amount if you wait until you reach 70.) So, if you think you have enough income from other sources, you might decide to delay taking Social Security – but if you need the money, you may not be able to wait. And here’s something else to think about: If your spouse had considerably higher earnings than you did, you may be eligible for spousal benefits.

  • Consider an annuity. You might want to consider purchasing an annuity that provides lifetime payments. Some annuities are even indexed for inflation, meaning payments will increase or decrease each year, keeping pace with the Consumer Price Index. Annuities are not suitable for everyone, though, so, before investing in one, you should consult with a financial professional who is familiar with your situation.

Finally, don’t rule out the possibility of earned income. Just because you’ve retired from your full-time job doesn’t mean you can’t work in some capacity, perhaps by doing some part-time work or consulting or even opening your own small business.

Look at all these ideas when thinking about putting together an income plan for your retirement. You may find that your diligence will pay off.

This article was written by Edward Jones for use by your local Edward Jones Financial Advisor.

Edward Jones, Member SIPC

Bio of Local Resident John-Paul:

John PaulHi, my name is John-Paul Tancona and I’m a financial advisor with Edward Jones. I have over 19 years of experience in this industry, working with both institutional and retail investors.

John PaulI earned my bachelor’s degree at Villanova University in 2000 and immediately started my years journey into the world of finance. My first 13 years were spent working at high profile wealth management firms covering large institutional investors. Recently, I joined Edward Jones and changed my focus to educating and empowering individual investors so they can achieve all of their financial goals.

We believe in working with investors one on one, either at your local Edward Jones office or conveniently at your kitchen table. We want to find out what is most important to you and your family so we can take you through our established process and partner together for life.

Whether you’re planning for retirement, saving for your children or grandchildren’s college education or just trying to protect the financial future of the ones you care for the most, we can work together to develop personalized solutions tailored specifically to help you achieve your goals.

I live in Sparta with my wife, Julieann, and two children: Dominic (10) and Daniel (7).

My branch office administrator, Ellen Hawkins, has 35 years of experience and is dedicated to offering you an ideal client experience.

I look forward to answering your financial questions and concerns. Please contact me to discuss your options so you can make informed decisions about your unique financial situation. 

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