Your Best Holiday Gifts to Yourself: Tips for Maximizing RetirementSubmitted by Bernhardt Wealth Management on December 16th, 2019
Now that the final rush is on for holiday shoppers and our credit and debit cards are getting their stiffest workout of the year, it might seem an odd time to think about savings strategies. But for those approaching retirement, there’s really no bad season to start strategizing ways to stretch those post-retirement budget dollars as far as possible. For most of us, retirement is a time to re-think how we spend our time, allocating our energies to what is most important to us rather than focusing on building or sustaining a career. Here are five smart tips for boosting and extending your retirement savings in order to make your retirement as financially stress-free as possible.
Maximize your contributions. If you’ve got a 401(k) or 403(b) plan where you work, you can contribute up to $19,500 in 2020, up from $19,000 in 2019. And if you’re over 50, you’re entitled to make an additional $6,000 catch-up contribution. If you don’t work but your spouse does, you may be able to contribute up to $6,000 to a spousal Roth or traditional IRA in addition to making up to $1,000 a year in catch-up contributions. Concerned about rising healthcare costs? A health savings account (HSA) may allow you to make tax-deductible contributions now and pay for healthcare costs—including Medicare premiums—with tax-free dollars later.
Pay off expensive debt. Especially if you’re carrying high-interest credit card debt, make it a priority to reduce or eliminate these balances before retirement. The less you pay in interest, the more your money is free to work for you, instead of a credit card company. A certified, professional financial adviser may be able to help you spot ways to get rid of debt without sacrificing other important priorities.
Extend your work life. Many Americans are enjoying more years of good health, thanks to advances in medical science. For some, that may mean that we can work a few years longer before full retirement. This offers several potential benefits, including an 8% annual boost (until age 70) in the amount received from Social Security each year in retirement and the opportunity to sock away even more money in your retirement and pension plans before leaving the work force.
Downsize. Do you still need that larger home? Can you relocate to a state with no personal income tax or an area with lower property taxes? Can you sell your existing home for enough to pay cash for a smaller retirement home? Do you still need two vehicles—or, depending on where you decide to live, any personal transportation at all? Many individuals experience at least some reduction in day-to-day expenses when they retire; take a close look at your planned retirement lifestyle and see if you can harness this trend for your advantage.
Continue investing for growth. Many retirees become excessively risk-avoidant when they approach retirement, putting most of their retirement savings in assets like bonds and certificates of deposit that are perceived as low-risk. But one of the greatest dangers for your retirement portfolio is inflation: the “silent thief.” But with today’s longer life expectancies—especially for women—our retirement assets may need to continue providing for us for thirty years, forty years, or even longer. In other words, even in retirement, growth in our assets will be important. This is another area where a certified, professional financial adviser can help you plan for future growth without sacrificing the safety you need.
We wish you a happy, safe and rewarding Holiday Season and a prosperous New Year! May your walls know joy. May every room hold laughter. May every window open to great possibility.