December 2024

OUR MONTHLY GUIDE TO EVERY MILEPOST, JUNCTION, AND LANDMARK ON YOUR ROAD TO RETIREMENT

THIS ISSUE

A Word from Your Advisors

What's Around the Bend:
Maximizing Social Security, Part I

What's Over the Next Hill:
Creating an Income Schedule

Watching the Weather:
Market Conditions on The Retirement Road

Andy Williams once sang that the holiday season is “the most wonderful time of the year.” We think that’s true! But it can also be the most expensive. Every year, families around the country save, set aside, and occasionally scrimp to ensure they have enough for their holiday spending needs. 

The more income you have, of course, the less stressful holiday spending tends to be. That’s especially true for those nearing or entering retirement, for whom the topic of income is never far from their minds.

Income is one of the most important aspects of any good retirement plan. For that reason, we are going to devote the next few issues of The Retirement Road to the topic of income planning. Each article will be devoted to a different source or strategy regarding income in retirement. 

The Minich MacGregor Wealth Management Team sends you our warmest holiday wishes. We look forward to helping you move further along The Retirement Road in 2025. May your New Year be happy and prosperous!

When it comes to income, few sources are more important — or more reliable — than Social Security. And guess what? There are ways to potentially maximize your Social Security benefits, there by increasing your post-retirement income. 

The first method for potentially maximizing your benefits is to delay collecting them in the first place. Too many people rush to collect their benefits as soon as they retire. This is sometimes a mistake, especially if you retire early. Technically, you can begin receiving benefits as early as age 62, but if you do, your benefits will be reduced significantly. For example, people born between 1943-1954 would see their payouts permanently reduced by 25%.

Waiting until your “full retirement age” might be a better option—it means you won’t face any reduction. What is your “full retirement age?” It’s the age at which a person may first become entitled to “full” or “unreduced” retirement benefits. This chart gives you the specifics:

QUOTES WE'VE BEEN THINKING ABOUT

“The best way to treat obstacles is to use them as steppingstones.”

— Enid Blyton, children’s book author

An oft-neglected way to ensure you have more income than you’ll actually need in retirement is to plan out the specific ways you will fund both your short-term needs and your short-, medium-, and long-term goals. In other words, every retiree should have an income schedule.

Now, everyone’s situation is different, which is why your investments should be coordinated with your specific requirements for income, growth, protection of principal, and liquidity. However, here are some general guidelines:

Short-Term Needs: These are essentially your monthly living expenses. With careful planning, many retirees find they can often meet these needs through their Social Security alone, supplemented with careful withdrawals from their savings and, if necessary, distributions from their retirement accounts. 

Short-Term Goals: These could be fixing the roof on your house, attending your relative’s destination wedding in the Caribbean, or making a major — but not life altering — purchase. (For example, a retired client of mine has devoted much of his now ample free time to mastering the art of pottery and decided to purchase a very expensive, very high-end kiln. This is obviously not the same as buying a car or moving to a new home, but it was also something he didn’t want to just stick on his credit card.) These types of goals can often be met through the use of short-term investments like money market funds, CDs, and Treasury bills. 

Intermediate Goals: When you need income for something that’s between 2 and 10 years away, it can often be funded through fixed-income investments like municipal and government bonds. 

Long-Term Goals: For longer-term income needs, goals that are far off on the horizon, or just to combat inflation, many retirees turn to long-term investments like stocks, mutual funds and exchange-traded funds, and even real estate.  

FUN FINANCIAL FACTS

Contrary to popular belief, only 10% of seniors over the age of 60 feel that old age is depressing, and some studies show they are less likely to experience depression than young adults. It goes to show that, for many people, the time you spend in retirement really are your ”golden years!”

SOURCE: National Library of Medicine Study

November was a strong month for the markets. The Dow rose 7.5% in November, its best month of the year. The S&P 500, meanwhile, gained 5.7%. Both indices were driven by certain companies getting a boost after the election, with investors feeling certain sectors of the market will benefit under a second Trump administration. 

What We’re Keeping an Eye On In December and Beyond

November 29, Black Friday, officially kicked off the holiday shopping season, which often provides a boost to both the economy and the markets. Some data suggests that, with inflation lower and interest rates coming down, consumers will break spending records this year. If so, that could likely continue propelling the markets higher. 

However, the future does contain question marks. One of the major aspects of Donald Trump’s economic agenda is higher tariffs. Many economists project that higher tariffs could increase consumer costs. If this happens, and inflation spikes again, it could cause the Federal Reserve to hit pause on further interest rate cuts. That would likely have a dampening effect on the markets. 

So, as investors, there are reasons to be both optimistic and cautious about the coming months. Our team continues to monitor the markets carefully. In the meantime, we wish you Happy Holidays!

Minich MacGregor Wealth Management
21 Congress Street, Suite 203
Saratoga Springs, NY 12866

(518) 499-4565

www.mmwealth.com