By Sharon Wagner
As you approach retirement age, you’re crunching the numbers and realizing you’ll be living less comfortably than you hoped in retirement. Are you doomed to pinch pennies through your golden years, or is it possible to boost your retirement income without spending another decade in the office?
If your 401(k) isn’t enough for the retirement lifestyle you’ve been looking forward to, use these strategies to grow your retirement income and put more money in your pocket.
Financial planning strategies to boost retirement income
Before making drastic lifestyle changes, talk to a professional to see how you can maximize your retirement savings. Retirement and estate advisors like those at REAP can help you increase your spendable income in retirement through strategies like these.
Make catch-up contributions
Still have a few years until retirement? Take advantage of catch-up contributions for 401(k), IRA, and HSA plans to contribute beyond annual limits.
Reduce investment fees
Some mutual funds and exchange-traded funds are full of hidden fees. Shopping around for lower cost mutual funds and ETFs increases your return on investment.
Strategize for lower taxes
Retirees can reduce taxes paid on investments by holding investments with the highest tax liability in tax-deferred accounts like 401(k)s and traditional IRAs. Then, strategize withdrawals to reduce your tax bill.
Delay retirement
It might not be your preferred option, but as AARP explains, delaying retirement just a few years will increase the amount you receive each month from Social Security. At age 70, you can maximize the benefit you’ll receive.
How to cut costs while enjoying your retirement
Your financial professional can help you plan the best strategy for maximizing retirement savings, but what if it’s not enough to close the gap? If you don’t want to keep working, you’ll need to adjust your budget so you spend less in retirement. However, that doesn’t mean giving up the lifestyle you want. These are the best strategies for spending less while living well in retirement.
Save money on your home
Housing is among the biggest expenses retirees face. As a result, it’s also the smartest place to start when you need to cut costs.
Downsizing is the most obvious way to shrink housing costs. By purchasing a smaller home or moving to a lower cost-of-living area, retirees can dramatically reduce their spending on mortgage payments, utilities, repairs, and even taxes.
Today’s low interest rates make refinancing a smart choice for seniors too. In addition to conventional loans, VA loans are also eligible for refinancing through the VA streamline refinance loan. Since these loans provide the option of rolling closing costs into the loan, they’re worth a closer look for veterans on a budget.
Stay healthy
Housing is expensive, but a mostly predictable cost. Healthcare costs, on the other hand, can quickly skyrocket past your wildest expectations. Per Money, the average couple will spend nearly $300,000 on healthcare in retirement. While Medicare premiums account for some of the cost, much of it comes from out-of-pocket expenses like deductibles, non-covered services, and long-term care.
The best thing older adults can do to reduce healthcare spending in retirement is to stay healthy. Eating well, maintaining a healthy weight, living an active lifestyle, getting enough sleep, and taking preventive care go a long way to reducing the risk of chronic illnesses and disability.
If you’re way behind on retirement savings, you might have no choice but to keep working into your senior years. However, if you’ve diligently saved and are looking for ways to add a little extra pocket money to your retirement income, these strategies could make the difference between scrimping through the golden years and enjoying retirement your way.
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