Maximizing Retirement Income
Maximizing Retirement Income — Ways to Stretch Your Savings
There are several options you can consider for maximizing your monthly retirement income and stretching your savings.
So you’re ready to retire but you’ve crunched the numbers and they aren’t quite working. What next? If your savings and income sources are falling short of your expenses, or you’re feeling nervous about your long-term financial situation, there are several options you can consider for maximizing your monthly retirement income and stretching your savings.
- Work longer — Not necessarily at your old job (though that may be an option). Many retirees get satisfaction from moving into new lines of work, or starting their own business. It can augment income, provide structure, and allow for challenging new opportunities.
- Delay collecting Social Security — If you’re eligible to receive Social Security, the earliest you can start collecting benefits is age 62. But there’s a downside. If you start taking benefits before you’ve reached your full retirement age, your monthly benefit check will be 25% to 30% less than it would be if you wait until you’ve reached your full retirement age (the exact amount of the reduction depends on the year you were born). Waiting longer could mean your monthly checks will be larger.
- Manage expenses — Create a budget so you can track expenses and income. This will help you avoid overspending early in retirement, which could put you in a bind later on.
- Create a withdrawal strategy — Decide how much you can withdraw from your savings each year and prioritize withdrawals from taxable and tax-deferred accounts.
- Be tax smart — Combine withdrawals from tax-deferred accounts like 401(k)s and traditional IRAs with tax-free accounts like Roth IRAs to manage your taxable income.
- Diversify your investments — Make sure your investment portfolio still provides the potential for some long-term growth along with ways to help preserve your assets while seeking stability of principal.
- Rebalance on a regular basis — As you begin tapping into your nest egg, selling off investments and reinvesting, be sure to rebalance your account regularly so that it stays in line with your long-term financial goals. Remember to talk with a legal advisor and tax consultant before making investment-related decisions.
- Evaluate the cost of staying in your home — When thinking about staying in your home versus moving, there’s more to factor in than just your monthly house payment. Maybe you’ve paid off your mortgage. But have you considered how much it costs to maintain your home on a monthly basis? How much are your property taxes? What about major repairs like putting on a new roof or replacing the furnace? If your retirement income is falling short, maybe now’s the time to consider downsizing into a more manageable home.
As long as you’re active and living a full life in retirement, you should continue to refine your goals and make adjustments to your retirement income strategy, as necessary. Consult with a financial professional to help keep everything on track.
ING U.S. does not offer legal or tax advice.