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5 Ways to Extend Your Retirement Savings
Now that you've reached the age of retirement, you may be wondering how you can extend your savings. Most retirees reach the age of retirement without adequate savings, causing undue stress and anxiety. If you're finding it hard to live on your social security check and your pension, check out these personal finance tips for retirement.
Move to a State with Lower Taxes.
Some social security benefits are subject to taxation by both the federal and state governments. 13 states in the United States tax these benefits, which means less money comes to you before you get your check each month. Moving to a state that does not tax social security is definitely beneficial in retirement. Many retirees who live in high-tax states pay more across the board than those who live in lower-tax states. States with no income tax, no tax on Social Security or low property taxes are ideal for retirees looking to save money.
Delay Claiming Benefits
To boost how much your social security check is each month, you should delay claiming benefits for as long as possible. If you can wait until the age of 70, you won't experience a reduction in benefits. Claiming social security before the age of 70 means you will see a reduction in benefits paid to you. While this means waiting longer for benefits to kick in, it will increase your Social Security checks permanently. There's a lot of math involved in understanding the impact of delaying benefits, so ask an accountant to go over all the details with you before you make a decision.
Tap into Your Home's Equity
Seniors have lots of equity tied up in their homes that could be monetized for daily living expenses. There are several different ways you can tap into the equity built into your home, each with their advantages and disadvantages. A reverse mortgage has become a popular way for many seniors to access their home's equity. Be careful with these since you are essentially selling your home to a company, rather than leaving it for your loved ones.
Downsizing is another popular way to tap into home equity that can be combined with moving to a different state. Moving to a smaller house can free up plenty of cash, especially if home values in your area have risen. Living within your means in a smaller house can provide extra retirement income.
Sell Your Life Insurance Policy
Another good way to raise funds for your retirement is by selling your life insurance policy. Most policies that feature an investment component have a cash value. You can sell policies to life settlement companies for a percentage of their cash value. Make sure you shop around with several different companies before committing to one. That way you find a favorable rate that helps you tap into the cash you've been saving for decades.
Cut Transportation Costs
The cost of owning a car is around $10,000 a year. If you live in an area with adequate public transportation or access to services like Uber and Lyft, you can save money by selling your vehicle. If you're paying for two cars then selling one of them is most certainly a way to save money. If you absolutely must have two vehicles, consider trading one in for an older model that will cost less to insure and maintain.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes.
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