Frequently Asked Questions
Is it ever a good idea to claim Social Security at 62?
Yes, in certain situations. If you have a serious health condition and do not expect a long lifespan, claiming early may result in more total benefits. It can also be necessary if you are no longer able to work and have no other source of income to bridge the gap until your full retirement age. The key is to make it a conscious choice based on your specific situation, not a default decision.
What happens if I have both a 401(k) and a Traditional IRA? Do I take RMDs from both?
Yes, you must calculate the RMD for each account separately. However, for IRAs (including Traditional, SEP, and SIMPLE IRAs), the IRS allows you to total the RMD amounts from all your IRA accounts and then take that full amount from just one of them, or any combination you choose. This rule does not apply to 401(k)s; the RMD for each 401(k) must be taken from that specific account.
I don’t have a large estate. Do I still need a will?
Absolutely. A will isn’t just for the wealthy. It’s the only way to ensure your assets, no matter how modest, go to the people or charities you choose. It also allows you to name an executor to handle your affairs, which can simplify the process for your family. Without a will, a court will make these decisions for you, which can cause delays and family disputes.
How can I protect my savings from being eroded by inflation?
The best long-term defense against inflation is a diversified investment portfolio that includes assets poised for growth, like stocks or stock mutual funds. While you want to reduce risk in retirement, eliminating all growth potential can be just as dangerous. Other tools include Treasury Inflation-Protected Securities (TIPS) and Series I Savings Bonds, which are government bonds designed to keep pace with inflation. For some, certain types of annuities can also provide inflation-protected income.
Disclaimer: This article is for informational purposes and is not a substitute for professional financial or tax advice. Consult with a certified financial planner or tax professional for guidance on your specific situation.
