Title: 3 Strategies to Amplify Your Retirement Income Without Delaying Social Security Claims
"Why wait for your retirement to truly begin? The old saying might be "Good things come to those who wait," but it doesn't always apply to Social Security benefits. Delaying your claiming until your full retirement age (or even better, until age 70) can significantly increase your retirement income.
However, what if you can't, or simply don't want to, wait that long? Fear not! Here are three strategies to boost your retirement income without surrendering your right to Social Security claims.
1. Multiply your investment income
The first strategy to consider when aiming to boost your retirement income is to maximize your investment earnings. This amounts to making your money work harder for you.
Discuss potential tax-saving steps with your financial advisor, such as transferring some funds into Roth IRAs. They offer tax-free growth and withdrawals, enabling you to enjoy more of your retirement income. Seek out investment opportunities that provide higher returns, such as dividend-paying stocks or Real Estate Investment Trusts (REITs). REITs, for instance, must distribute at least 90% of their income as dividends and are thus exempt from income tax.
Consider exploring other asset classes, like closed-end funds (CEFs). These investment vehicles often provide robust dividends. Remember, though, that it's essential to consult your financial advisor for any investment decisions.
2. Work part-time
For many retirees, part-time work can serve as an excellent alternative for boosting retirement income. Unemployment rates remain relatively low, making it potentially easier to secure a part-time job.
Keep in mind that earning additional cash might impact your Social Security benefits. Social Security will reduce $1 from your retirement benefits for every $2 you earn above $23,400 if you're younger than your full retirement age. During the year you reach your full retirement age, it will reduce $1 for every $3 earned above $62,160. Both these numbers are subject to change, so stay informed.
Fortunately, returning to work does not result in forfeiting your Social Security benefits permanently. Once you reach your full retirement age, Social Security will recalculate your benefit amount to account for any deducted earnings. Your benefits will also no longer be reduced beginning in the month you reach your full retirement age.
Surprisingly, working past your Social Security eligibility could even increase your retirement benefits. Social Security bases its benefit calculation on the 35 years of highest income. If you earn more in a new job than you did earlier in your career, Social Security will adjust your benefit to your advantage.
3. Move for fiscal freedom
Our third strategy for increasing your retirement income without claiming Social Security early is to consider relocating.
First, you can downsize your living space, whether by selling your house or condensing into a smaller apartment or home. This can reduce outgoings like property taxes and utilities, allowing you to allocate saved resources towards your retirement expenses.
Second, consider moving to a state with favorable tax policies regarding retirement income. Forty-one states do not impose state income tax on Social Security benefits, while thirteen states provide exemptions for retirement income sources, including 401(k)s and IRAs.
Relocating won't necessarily increase your disposable income, but reducing your living expenses can make your retirement income go further. Keep this in mind when weighing the pros and cons of a move."
After maximizing your investment income by exploring opportunities like Roth IRAs, dividend-paying stocks, REITs, and closed-end funds, you might consider supplementing your retirement fund by taking on part-time work. However, it's important to be aware that excess earnings above certain thresholds can impact your Social Security benefits. Lastly, relocating, whether it's downsizing your living space or moving to a tax-friendly state, can help stretch your retirement income. Managing your money wisely in these areas can contribute significantly to your retirement finance and ensure a comfortable post-retirement life, making money work harder for you in your golden years.
