At 67 years old, the writer of the letter is still working and has recently received a $30,000 raise in July 2023. They are trying to save for retirement and are considering taking their Social Security benefits to help pay their bills while contributing more to their government savings plan. They acknowledge that they may never catch up on all the years they couldn’t contribute, but they will receive a pension from their government agency.
The writer is allowed to contribute up to $30,000 a year to their government savings plan as a pretax catch-up, and currently has $25,000 saved. They are seeking recommendations on how to best allocate their funds and whether to take their Social Security benefits now or delay. They do not have a financial adviser and feel hesitant to seek one for such a relatively small investment amount.
The response to the letter emphasizes the importance of continuing to save for retirement and acknowledges the writer’s efforts to do so. It notes that the writer is past their Full Retirement Age, so their Social Security benefits would be higher if they were to claim them now. However, their benefits may be subject to taxes depending on their income level, so they should weigh the potential impact.
The response suggests that, since the writer received a $30,000 raise, they may be able to comfortably increase their contributions to their government savings plan without feeling a significant difference in their day-to-day expenses. They are advised to contribute as much as they can without compromising their financial stability. The writer is also reminded that delaying their Social Security benefits until age 70 would result in a higher payout per month, which could be beneficial in the long run.
Overall, the advice emphasizes the importance of making strategic decisions now to secure a comfortable retirement in the future. The writer’s pension, along with their efforts to save and delay Social Security benefits, put them in a relatively good position to optimize their retirement planning. Despite not having been able to contribute as much in the past, their current actions bode well for their financial future. It is recommended that they continue to find ways to save and invest wisely to ensure a stable retirement.
