The Basics of Retirement Services – What You Need to Know

Retirement planning is a comprehensive process considering all aspects of your financial picture. It includes investing, taxes, Social Security and insurance.

You must understand all of these topics to ensure a secure retirement. Test your knowledge with this 10-question quiz.


Investing is putting your money to work for you, hoping it will grow or appreciate in value. You can invest in various assets, including stocks, bonds and real estate. You can also invest in precious metals such as gold and silver.

Knowing how much risk you’re willing to take on is essential whether you’re trying to retire early or save for a big purchase. Your priorities, timeline of when you want to achieve your goals and risk tolerance will help determine how much trouble you can handle.

One of the most common ways to build up a retirement nest egg is by participating in a 401(k) plan. These plans allow employees to divert a portion of their pre-tax income into retirement investments and may also offer employer matching funds. Most companies hire third-party support, such as ADP, to manage and set up employee plans.

In addition to 401(k) plans, other popular retirement investing options include individual retirement accounts (IRAs) and Roth IRAs. Many investors use these tax-advantaged savings vehicles to build a retirement portfolio that includes stocks and bonds.

Investors often seek advice from a financial advisor, who can help them determine the best types of investments and brokerage accounts to open. They may also recommend a strategy called “dollar cost averaging,” which involves making regular contributions to an investment account and investing less in high-priced investments when the market is low and more in lower-priced assets when the demand is high.


Whether you’re planning for retirement or are already retired, taxes can significantly impact your finances. They can eat into your retirement income and decrease your available money for living expenses.

Taxes also can affect how long your retirement assets last. You’ll want to be sure you’re taking advantage of any tax deductions and reductions that apply to your situation.

Some of the most common sources of retirement income are taxable, including Social Security benefits. Check with your accountant or tax adviser to determine if you must pay state or federal taxes on your retirement income.

Most states have a minimum threshold for how much of your Social Security benefits are taxable. This can range from 50 to 85 percent of your total income.

The IRS offers helpful worksheets to help you calculate the taxable portion of your Social Security benefits. You can reduce your taxable amount by reducing the number of your benefits or by filing separate returns.

However, you’ll want to know about the state’s relatively high sales and property taxes. The statewide median effective property tax rate is the second-highest in the nation, so you should look into the homestead exemption and tax deferral programs available for seniors.

Another big tax bite for retirees is the estate tax or inheritance tax. Fortunately, many states have estate tax exclusions for their residents.

One way to avoid paying this tax is to transfer assets to your spouse in advance. That’s a relatively straightforward process and can save you thousands of dollars.

Social Security

Social Security is a federal program that provides retirement benefits and disability income to qualified workers, their spouses and children. It is administered by the Social Security Administration (SSA).

Almost all workers contribute to Social Security through payroll taxes, and nearly all older adults receive retirement or disability benefits. About 97 percent of people aged 60 to 89 have some retirement income in the United States.

The retirement and disability benefits a person receives depend on several factors, including their current earnings record and the age at which they claim their benefit. Typically, benefits replace about half of the worker’s prior earnings for lower-earning workers and up to 30 percent of revenues for high earners.

The government collects payroll taxes and trust fund reserves to finance Social Security. Then it invests tax revenues and excess resources in special U.S. Treasury bonds.

There are three basic categories of Social Security beneficiaries: retired workers, disabled workers and their families, and survivors. Survivor benefits are paid to a spouse, child or parent of a worker who dies.

While the government has a strong track record of paying claims, it is still being determined if Social Security can continue. The SSA publishes midline and optimistic projections for the program, but these predictions are based on actuarial science, which is subject to uncertainty.

Moreover, it is essential to remember that Social Security has accumulated trillion dollars in liabilities. These liabilities must be covered by funds from new taxpayer contributions or other sources before any transition to a private system can happen.

As a result, any large-scale privatization plan will require significant new federal borrowing. This, in turn, will inevitably be accompanied by cuts to past liabilities – or increased contributions from current workers – to keep the new system solvent.


Insurance can be a big part of retirement planning, especially if you are in an early retirement stage. It can help to cover healthcare costs, provide money for your family in the event of a death, and even protect your financial future.

Life insurance, in particular, is a type of protection that can help protect your family. It can pay a lump sum to your beneficiaries if you die and build cash value that you can use to supplement your retirement savings.

Life insurance can be affordable or expensive, depending on your situation and needs. You can buy a policy to cover any case, including funeral expenses, debts, and spousal benefits.

For example, if you have a spouse who is a pensioner and receives a total pension payout, you may want to purchase a life insurance policy to ensure that your surviving partner has money in place in the event of your death. This strategy, called pension maximization, can be an excellent way to protect your family financially.


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