Here are four easy ways to stretch your retirement income as far as possible after you stop working:
- Consider the tax implications when you plan your retirement
One of the best ways to stretch your retirement income is by paying lower taxes each year. If you plan it right, you’ll have both taxable and non-taxable retirement income sources in your later years.
- Delay your Social Security retirement benefits until your 70th birthday
Starting your Social Security benefits early can reduce them by as much as 30%. You’ve probably heard this before since delaying can make such a huge difference in budgeting your retirement income. While waiting to collect isn’t always an option, if you can wait, you’ll increase your benefits by up to 24%. One important note: If decide to delay your Social Security retirement distributions, be sure to apply for Medicare at 65. If you don’t, you’ll have to pay a penalty!
- Get creative with your housing options/living situation
Your house is likely your biggest asset as well as your greatest expense. With that in mind, think about how you can use that asset to maximize your retirement dollars. You can take out a home equity loan, downsize your property, rent out one of your rooms, work part-time from home and use the home office tax deduction. Your home’s almost always your biggest asset, so don’t be afraid to use it. That said, do be careful if you’re considering taking out a reverse mortgage.
- Invest now where the dividends pay off most down the road
As you get closer to retirement, your portfolio needs to evolve. If you prefer investing in the market, look for dividend-paying stocks — especially after you turn 50. When you buy stock in a company, you aren’t just hoping its total value rises. Rather, you’re purchasing a share in that company’s ownership. You also get paid a share of the company’s profits in dividends, at that board’s discretion.
If this sounds too complicated, don’t worry. Rani Jarkas, as a skilled financial advisor, can help you develop a strategy to keep your taxes low today as well as after retirement. Rani Tarek Jarkas is a highly experienced and accomplished financial services executive at Cedrus Investments.