The creative team for real estate developers came up with the term “the golden years” in 1959 as part of a pitch to sell homes in the nation’s first large-scale retirement community. Developers of the $2 million golf resort in the middle of an Arizona desert were hoping to sell the idea of “an active new way of life” for people approaching retirement.[i] Their idea worked. The “golden years” refers to “the years of retirement, normally after age 65.”[ii] Making the golden years truly golden involves having relatively good health, adequate income, and a meaningful life.[iii] While good health and living meaningfully depend on lifestyle choices and sometimes heredity, maintaining or generating adequate retirement income requires prudence and well-laid financial plans.
Risk Management and Growth Strategies for Your Retirement Income
Here are six ways for managing your money in retirement:[iv]
- Cut investment expenses and fees. You can potentially increase your income by reducing your outgo. If you have income from mutual funds, look for hidden fees. You may have fees for fund management, transactions, and loads. Get with your financial advisor to examine the lowest-cost options for your investment funds.
- Take a look at how your investments are taxed. You may want to consider moving your investments with the highest possible tax liability to tax-deferred accounts and those investments with the lowest taxable liability to taxable accounts. Keep in mind that this may involve transactional fees. Investors should consult with their tax advisor regarding the tax consequences of investing.
- Catch-up contributions are one way to build your retirement fund quickly. Annual contributions to tax-deferred accounts are limited, but once you reach the age of 50, you’re allowed to add more into your retirement account. Once you’re 55, you can also make catch-up contributions to your health savings account.
- Although Social Security income is only supposed to be part of your retirement income, you can boost your benefits by waiting to apply. Full retirement age is currently 66 or 67, when you’re eligible to receive 100% of your designated benefit. You get about an 8% increase per year by waiting until you’re 70. For healthy older workers, this is an excellent way to boost your Social Security benefits by up to 24%.
- Part-time work for retirees is becoming an increasingly attractive option to boosting retirement income. Part-time employment may also improve your quality of life in retirement.[v]
- Paying off your debt before you retire helps to bolster retirement income. Unfortunately, it’s becoming more commonplace for workers to enter retirement with mortgage or credit card debt. If you aren’t retired, you should consider making debt elimination a priority.
If you would like to talk more about your options, please give us a call at 989-692-2200, we look forward to serving you!