Strategies for Boosting Income Every Person Approaching Retirement Should Be Aware Of

As your golden years approach, you may wonder if you have saved enough money to support your desired lifestyle after retirement. The transition from a steady paycheck to relying primarily on government stipends, retirement funds, and personal savings fills you with dread. Unfortunately, for a portion of the population—15%, to be precise—the cash reserve is insufficient, forcing them to seek alternative subsistence techniques.

However, with the appropriate strategies, you can easily increase your nest egg for the golden years. Here are six key strategies for ensuring a comfortable and financially secure retirement.

Put off Getting Social Security Benefits

Delayed social security benefit claims are one of the easiest ways to increase your retirement income. Your monthly checks will increase dramatically if you wait until your full retirement age (FRA) or even later, even though you can begin receiving benefits as early as age 62. 

Up until the age of 70, your benefits increase by roughly 8% for each year that you wait after your FRA. Your retirement income may be significantly increased over time by this rise. When choosing when to collect your benefits, take into account your financial demands, health, and life expectancy.

Consider Leveraging Your Home Equity

Right now, a hot strategy for making sure you have a comfortable and financially smooth retirement is to tap into your home’s equity by getting a reverse mortgage. This type of loan is specially designed for people 62 or older, letting them turn some of their home’s equity into spendable cash without needing to sell the house or deal with new monthly loan bills. In this setup, it’s the financial institution that ends up paying the homeowner, offering options like a one-time bulk payment, regular monthly cash, or access to a credit line.

However, it’s important to carefully consider the reverse mortgage pros and cons to figure out if it’s the best move for you. The smartest approach is to reach out to a well-respected financial lender to fully understand what taking out this kind of loan involves.

Increase Retirement Account Deductions

Stack up your contributions to golden-year funds like 401(k)s and IRAs, especially as you near the finish line for retirement. Getting to 50 allows you to turbocharge your savings through extra contributions, known as catch-up contributions. In 2024, this means you can chuck an additional $7,500 into your 401(k) and $1,000 into your IRA. 

Jumping on this chance to crank up your contributions can majorly boost your retirement income, ensuring a cushier buffer for your twilight years.

Create a Plan for Withdrawing

How long your savings sustain you is significantly influenced by your approach to drawing from your retirement reserves. By devising a strategic approach to accessing these funds, you can continue to see growth and potentially minimize tax liabilities. The principle known as the “4% rule” is often cited, advising that you withdraw 4% of your savings during the initial year of retirement and adjust that amount annually to keep pace with inflation. 

This concept could offer a solid starting point. Also, be mindful of the tax impacts of withdrawals from different types of accounts, such as Roth versus traditional IRAs. Engaging with a financial advisor to tailor a withdrawal strategy to fit your specific circumstances could prove to be exceedingly advantageous.

Diversify Your Revenue Sources

Relying solely on savings or social security is risky. Enhancing your financial stability and adaptability is achievable by broadening your income sources. Consider boosting your earnings through part-time work, stocks that yield dividends, or real estate investments. Annuities, offering consistent payouts after an upfront payment, serve as another reliable income avenue. 

Cultivating multiple income streams is crucial for reducing the effects of economic shifts and financial uncertainties.

Downsizing or Moving

When you retire, boosting your spending money is easier if you reduce your costs. Moving to an area where things cost less or settling into a more compact house can help you keep more cash in your pocket. 

This could mean moving to a country where your money goes further because things are cheaper, or swapping a pricey city life for a more affordable suburban setting. Any move should take into account the community, healthcare, and lifestyle issues. There are instances when living in the ideal location might raise your standard of living in addition to your income.

You can also consider downsizing your home to minimize your utility bills and put that money towards something more useful.

Conclusion

Your golden years can change from being a time of financial worry to one of comfort and security if you approach retirement with a strategic perspective. 

You’re creating the conditions for success by putting these techniques into practice, not merely for survival in retirement. Never forget that starting to plan is never too early or too late. Taking action now can significantly affect your retirement income and, ultimately, your capacity to fully enjoy this important phase of life, regardless of how long you are from retiring or how close you are to it.