Maximize Your Retirement Money with These Six Tips

Are you making the most of your retirement money? With so many potential methods for funding your retirement, you may be overlooking some steps you can take to grow your savings and keep your resources working for you after you retire. Here are six of the best tips we’ve found for maximizing your retirement money.

1. Take Advantage of Matching

If you have access to an employer-sponsored retirement plan, be sure to contribute the most you can for your match. The more you put into the plan, the more you’ll save — and have ready for the future. The maximum tax-deferred contribution for 2019 is $19,000, but you can chip in an additional $6,000 if you’re over the age of 50. Many expect contribution maximums to increase in 2020. The IRS publishes updated contribution maximums in October of every year, so be sure to check their website for updated numbers.

If your personal financial situation currently does not allow you to contribute the maximum, be sure to put in what you can and increase that amount each year. It’s helpful to understand that because of tax deferment, each dollar you contribute decreases your take-home pay by less than a dollar.

Once you’ve put money into your plan, try to avoid any unnecessary, early withdrawals. While it is possible to borrow from an employer-sponsored retirement plan, doing so essentially means borrowing from your future financial resources. The penalties alone should serve as a deterrent; if you borrow from your retirement accounts, you’ll pay a tax penalty upfront as well as paying taxes on the money you use to pay back the loan.

2. Calculate Your Needs

How much do you plan to spend each year in retirement? If you don’t know, consider creating at least general projections for your expected costs.

Where and how you choose to live in retirement will have a significant impact on the financial resources you’ll need. If you plan to travel, it’s important to understand the pricing associated with the places you hope to stay. On the other hand, if you plan to move to a community, you’ll need an estimate of independent living cost.

Regardless of how you plan to spend your time in retirement, you may want to consider doing some research now to assist with your retirement budgeting. This is a particularly helpful step if you’re nearing your goal retirement age because you’ll have a better idea of the resources at your disposal and can match them to your planned lifestyle. Once you know your general costs, you can determine whether you have adequate resources to fund the lifestyle you desire or if you need to adjust your savings or investment strategies.

3. Collect Benefits at the Optimal Time

If you still work, make sure you understand the rules for any work-related benefits before putting in your notice. For example, if you have a defined benefit pension, you may need to contact your human resources office to confirm your exact start date before determining your last day at your job. By retiring on the anniversary of your start date, you may receive an additional full year of credit toward your pension. Some pension plans may also consider your age when determining your monthly benefits amount.

Other types of retirement benefits also have age requirements. For example, some people choose to begin collecting their Social Security benefits when they turn 62. While having the additional monthly income may boost your retirement budget, choosing to draw benefits early will reduce the amount you receive each month.

If you wait to claim your monthly payment until age 66, you will be eligible for your full Social Security benefits. However, by waiting until age 70, you can boost your monthly check as high as 132 percent of your eligible amount. Waiting beyond age 70 will not result in any additional benefits.

4. Choose the Right Investments for You

Seasoned investors know that the options are nearly limitless when it comes to your retirement money and retiring well is the key reason most people choose to invest. To help maximize your retirement money, consider ways you can achieve the best returns without taking excessive risks.

Experts recommend a variety of strategies depending on your age, overall financial situation and other factors. A balanced portfolio of funds, including stocks and bonds, can help you achieve the rate of return you need to support your ideal retirement lifestyle. One type of portfolio, known as “total return,” offers withdrawal guidelines that allow you to take approximately four percent of your money each year. The total return portfolio targets an average annual return above your expected withdrawal rate over a decade or two.

Among other types of investments, bonds can provide flexibility and lower risk for people with a shorter available time until retirement. You can choose from bonds with short, medium and longer terms, along with high-yield and adjustable interest rate options. Your financial adviser can assist you with purchasing packages such as bond mutual funds, and you can create a bond ladder with individual investments that mature to meet your cash flow expectations.

Other frequently used investments include retirement income funds, which encompass a diverse mix of stocks and bonds, as well as immediate annuities — a type of insurance that can help produce a retirement income in exchange for an up-front, lump payment.

Some people choose to diversify their retirement cash flow even further. For example, rental real estate can be a desirable method for creating a reliable income both before you retire and after you’re no longer working full time. Real estate can have significant advantages — especially in booming areas — but it’s important to note that it also can require high maintenance costs and unanticipated expenses.

All investments have inherent risks. If you’re not an expert in each area yourself, you may want to consider working with an experienced financial adviser to ensure that you understand the pros and cons of each type of investment before making a final decision.

5. Invest Efficiently

Regardless of the specific investments you choose, you’ll want to take steps to minimize fees and expenses that eat into your available retirement income. You’ll also want to manage your tax situation efficiently to avoid paying more than necessary each April.

If you’re working with a financial adviser, be sure to ask about hidden fees — including those that may not appear on your account statements. In addition, when you purchase investments such as mutual funds, keep an eye out for additional costs such as transaction fees. For every type of investment in your portfolio, consider asking your adviser to show you the options with the lowest pricing.

To manage your tax burden as efficiently as possible, ask your adviser to hold investments with the highest likely liability in tax-deferred investments such as traditional IRAs. Small tax changes and fees may seem insignificant, but they can add up to real costs that impact your retirement budgeting. Over time, small decreases in expenses related to your investments can make a difference in maximizing your retirement money.

6. Consider an Independent Living Community

When you choose to move to an independent living community, you benefit in a variety of ways. From fine dining to social events, a focus on wellness, and an array of helpful programs and amenities, independent living can help you create your ideal retirement lifestyle.

In addition, independent living can serve as a prudent investment to help you maximize your retirement money. In a community like Aspire at Carriage Hill, you’ll benefit from maintenance-free living, including snow removal, many of your utilities, Wi-Fi, weekly housekeeping and scheduled transportation. You’ll also save money by having access to an array of on-site amenities like resort-style dining, gardens, a fitness center, salon and spa, game rooms and more.

To see first-hand how life at Aspire at Carriage Hill is a great value, we invite you to tour our community and meet other residents and staff. To schedule your visit, please contact us today.

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With all of the decisions you need to make in choosing a Richmond independent living community, we want to make sure you and your family have the information you need. Submit a request for more information and our team will be in touch shortly.

5020 Sulky Drive

Richmond, VA 23228
(804) 286-1133

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