Baby Boomers are retiring every day and have important decisions to make. Last year, the Government Accountability Office (GAO) offered two pieces of advice for retirees:
1. Delay the age when you elect to start receiving Social Security payments
Most people should avoid the temptation to begin payments early. While it may be tempting to start receiving Social Security payments early, you are most likely to receive a greater lifetime income if you wait until your full retirement age. Statistically if you live 12 years of more after you retire, delaying payments would make sense. Remember that Social Security does not provide enough income for most retirees so it is important to accumulate assets in other plans (i.e., IRAs and employer sponsored plans).
2. Convert your cash-balance defined benefit pension into a lifetime income annuity rather than take a lump-sum payment upon retirement
Only one third of Americans are covered by a defined benefit plan. The rest are accumulating assets in a retirement plan and will receive a lump sum distribution. Of course, even if an employer retirement plan only offers a lump-sum payment, retirees can go to an insurance company and buy their own annuity. However, statistics show that most retirees who are required to put in the effort themselves to find an annuity do not do so. Converting at least a portion of a lump-sum retirement-plan payout into a lifetime income annuity may substantially increase the odds of achieving a comfortable retirement.
You can read the full article about the GEO report here.