Retirement planning can be very confusing and it is essential to understand the difference between Social Security vs. 401k plans. Both are very good sources of income if you know how to use the benefits to your advantage. A Los Angeles Social Security attorney can explain the differences and show you how to work them to your financial advantage.
Social Security retirement benefits allow you a monthly benefit after you retire. In order to receive these benefits, you must have worked for at least ten years. The amount of your benefits depends on how much money you paid into the system during the time you worked. The more years that you work, the higher your benefits will be.
You can start collecting Social Security benefits at the age of 62 but the younger you retire, the less your benefits will be. If you wait until the full retirement age you can receive all of the benefits that are available. If you wait to retire until age 70, the monthly benefit will be as much as 24 percent higher. A Los Angeles Social Security attorney can explain all of the details to you.
The 401k is a retirement savings plan that is completely voluntary and is sponsored by your employer. Every pay period, a percentage of your income is invested and distributed at retirement. 401k contributions are taken directly from a worker’s paycheck, untaxed, and are often matched by an employer. The norm is around 3 percent.
You can begin collecting money from your 401k at the age of 59 and a half. You can also opt to wait but not past the age of 70 and a half. Now, ideally you can collect both Social Security benefits and your 401k when you retire but some choose to collect from the 401k while delaying Social Security benefits so they increase.
There are numerous factors to consider before deciding on your retirement, including how much savings you have, what the return of your 401k is, and any medical needs you may have. Consider contacting a lawyer experienced in retirement planning to discuss what options are available to you. Call the Law Offices of Tony Adderley at (310) 554-5188.