We’ve faced a brutal yield environment since the 2008 crash, so I thought it would be a good time to review some of the traditional sources you might consider for increasing your income in retirement.
Some of these are things that I have discussed before, but they bear repeating.
[ad#Google Adsense 336×280-IA]The first is a topic Marc Lichtenfeld and I have beaten to death: annuities.
There are pluses and minuses to annuities, but the costs are high because they offer guaranteed income.
Depending on their financial situations, this can be a real lifesaver for some retirees.
Marc and I recently wrote dueling articles on the subject and then went head to head in a video debate.
I highly recommend you take a look. Annuities can be an essential element of a diversified retirement plan.
The next, a new one, is one that’s seldom used by retirees. I’m talking about life settlements.
These are not something most of us think of when we think of retirement income. They involve the sale of life insurance policies (not just whole life policies that have cash value).
Life insurance policies can be sold if they are no longer needed or if they’ve become too expensive. They can have big cash values depending on the type of policy and the length of time you’ve been paying into them.
Reverse mortgages, which are gaining in popularity, are also an option. These allow you to access your home’s equity without selling it.
But, like annuities, reverse mortgages have pluses and minuses associated with them. Make sure to consider your options and the costs of a reverse mortgage before you jump in.
Of course, you can also work in retirement to generate some cash. Thirty-seven percent of retirees do work in some capacity. And it may not come as a surprise, but most people age 50 and over plan to work after they enter retirement.
Where they will find jobs is the big question. If as many people actually pursue work in their golden years as they say, it’s going to be one crowded job market.
Finally, one of the biggest ways for retirees to maximize their cash flow (by as much as 32% to 75%) is available thanks to Social Security. I’m talking about the ability to boost your payouts by delaying your benefits.
As most of you should know, if you can delay claiming until age 70, you’ll get the largest increase in monthly benefits.
For example, take a look at this chart:
A $1,000 benefit at age 66 could turn into $1,320 by delaying for just four short years. Claiming benefits as early as possible, at age 62, is like incurring a 25% penalty. You’d receive only $750 per month.
But the longer you can let the years click by, the greater your monthly amount will be down the road. And boosting your payouts by as much as 32% at age 70 is no small feat. It’s a nice kicker that can make life a lot easier.
From a yield perspective, it’s tough out there right now, I know. But there are some things you can do to make retirement better. Make sure you check out all your income options.
Good investing,
Steve
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Source: Wealthy Retirement