3 Simple Ways to Increase Your Retirement Income

Retirement IncomeA soon-to-be-released report from the Deloitte Center for Financial Services reveals the nation's dire state of retirement readiness -- and, on top of that, how deflated so many people feel about the prospects of their future getting better:
  • Although saving for retirement is a top priority, 58 percent of those surveyed said they don't actually have a retirement plan.
  • One in five say they will rely entirely on Social Security to provide their retirement income.
  • Nearly 40 percent believe that no matter what they do with their money, they won't be able to generate the income they want when they retire.
Yet despite people's grim outlook for their retirement prospects, few trust financial professionals to help them, instead preferring to handle their money on their own.

Don't give up just yet: You can take charge of your finances in ways that can make a big difference in retirement. Here are the three key areas where you can squeeze out more money to cover your retirement living expenses.

1. Make The Most of Social Security. Social Security seems simple on its face, but choosing the best strategy for taking advantage of the entitlement is complicated, especially if you have other family members depending on your benefits. In general, the longer you wait, the bigger your monthly checks will be. Moreover, waiting can boost not only your income but also the benefits your spouse can receive, both in spousal benefits during your lifetime and after your death in survivors' benefits.

To do: Visit the My Social Security website where you'll get good information about what your benefits will look like, along with information to help you choose the best time to start taking your benefits. (Here are other strategies to follow to get maximum value from Social Security.)

2. Get Better Investing Returns. In the current environment of rock-bottom interest rates, you can't expect no-risk bank products like CDs to give you the income you need in retirement. These days, you have to understand how different investments provide income, including bonds, stocks, and specialty investments like real-estate investment trusts and master limited partnerships.

To do: Understanding portfolio income doesn't mean you have to invest in all of these different things. Often, a simple combination of stock and bond index mutual funds or exchange-traded funds is all you need to produce both the income you need and the growth to meet rising costs.

3. Take Advantage of Other Financial Resources. Beyond Social Security and your investments, many retirees have few or no financial resources to tap into after they quit their jobs. Having to go back to work during retirement is not only unpalatable to most retirees but also difficult to do in this economy, in which millions of underemployed and unemployed individuals are fighting for job opening.

To do: You may not even have thought about some of the resources that may be available to you. For instance:
  • If you had a retirement plan at a former employer, check to find out how to draw benefits from it, either directly from the plan or by rolling over the proceeds into a retirement account of your own.
  • For low-income retirees, government assistance can help you make ends meet. Medicare and Medicaid coordinate to provide health benefits, while other programs can provide assistance with food and utility bills. Contact the agency in your state or local government that handles financial assistance for more details, as they can vary dramatically from place to place.
  • If you own your home, you may be able to draw income from your home equity. A reverse mortgage is one option, although it can often involve considerable fees.
  • Private assistance can also cut your costs. Drug companies often offer medications at lower cost to those in need, while even simple senior discounts can produce big savings.
Living on a fixed income is challenging, but it's not impossible. Rather than giving in to despair, focusing on these keys will help you come up with the income you need for a better retirement.

Photo Credit: Alamy

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Carly

The options for increased income during retirement include investing wisely (as stated above), working part-time or consulting in your field of expertise and/or starting a business in an area you wanted to pursue but never had time for. I recently came across a new retirement site http://retirementandgoodliving.com that has some related information and also addresses many other retirement issues.

March 23 2013 at 10:38 AM Report abuse rate up rate down Reply
drmike15

Social Security is not an "entitlement" with all the emotional and political baggage that has been attached to that word. It is a social welfare program, a program for the well faring, or faring well, of the people. It is not something one gets for free, hence one is not "selfish" when one lays claim to it. You pay into the system (quite a bit, actually) for a payoff when you retire. You earn what you get. So lets get our terms straight and do NOT call it an entitlement.

March 11 2013 at 3:13 PM Report abuse rate up rate down Reply
sfisher951

"The longer you wait, the bigger your [Social Security] monthly checks will be." That is true but the issue here is that you DO have to wait to be able to receive the higher benefit. You can collect as early as 62, for example, and received 48 months of payments before you would receive your "standard" benefit at 66 with (only) a 10%-12% "penalty." However, since you can invest the money you receive during those 48 months, the break even point is quite far in the future. This is something the government doesn't really want people to do for obvious reasons. They hope that, in the law of averages, you'll either kick off either before you collect anything or before you would have broken even!

March 11 2013 at 12:11 PM Report abuse rate up rate down Reply
Boyd Lemon

This is all good advice. Obviously, financial planning is key to a fulfilling retirement. But I want to call to the attention of baby boomers and anyone planning retirement or recently retired that emotional planning is important too. Going from a full time job to no job may seem ideal, but it is an enormous and difficult adjustment. Too many retired people end up feeling useless, with no purpose. Many suffer from episodic depression as a result, making what could be the best time of their lives, the worst time. Prepare yourself by finding a passion to pursue during retirement.

Boyd Lemon-Author of "Retirement: A Memoir and Guide" (December 1, 2012); Eat, Walk, Write: An American Senior’s Year of Adventure in Paris and Tuscany (2011); and 5 other books. Information, reviews and excerpts: http://www.BoydLemon-Writer.com

March 09 2013 at 2:48 PM Report abuse rate up rate down Reply