You deserve a financially secure retirement. Unfortunately, there's no guarantee you'll get one. Social Security isn't typically enough to provide the money you need without additional income, and saving enough to finance a comfortable life can be hard.
The good news is there are some hacks that can make it easier.
Three Motley Fool retirement experts have provided some simple tricks you can try to improve the chances your later years will be good ones that are free of money worries. Here's what they are.
Claim all the Social Security benefits you're entitled to
Katie Brockman: Nearly one-quarter of married couples depend on Social Security benefits for at least 90% of their retirement income, according to the Social Security Administration. It can be challenging to make ends meet when you're relying primarily on Social Security. But the good news is that you may be eligible to collect more than you think.
Besides your standard retirement benefit amount, you could also be entitled to spousal benefits, divorce benefits, or survivors benefits.
If you're married to someone who is eligible for Social Security benefits, you may be entitled to spousal benefits. The maximum amount you can receive is 50% of the amount your spouse can receive at his or her full retirement age (FRA). If you're entitled to benefits based on your own work record, the SSA will pay the higher amount. And if the amount you qualify for based on your own work record is more than 50% of your spouse's benefit amount, you're not eligible for spousal benefits at all.
So, for example, say you're entitled to receive $800 per month in benefits at your FRA, and your spouse qualifies for $2,000 per month at his or her FRA. In this case, you'd be eligible to receive a maximum of $1,000 per month in spousal benefits. The SSA will pay out your $800 per month, then you'll receive an additional $200 per month so that your total benefit amount comes to $1,000 per month.
Divorce benefits are similar to spousal benefits, except they're available to those whose ex-spouses are entitled to Social Security benefits. In order to qualify for divorce benefits, your marriage must have lasted at least 10 years, and you cannot currently be married. If your ex-spouse has remarried, however, that doesn't affect your ability to claim divorce benefits.
Similar to spousal benefits, the most you can receive in divorce benefits is 50% of the amount your ex-spouse would collect at his or her FRA. With both spousal and divorce benefits, your spouse or ex-spouse's benefit amount will not be impacted regardless of how much you receive.
You may also be entitled to survivors benefits if your loved one has passed away. These benefits are typically available to widow(er)s, but sometimes parents, children, and other family members can claim them as well. How much you'll receive will depend on your age, how much the deceased person was eligible to receive, and your relationship with the deceased. In many cases, widow(er)s are entitled to receive their former spouse's entire benefit amount.
Social Security benefits are an integral aspect of retirement, so it's wise to make sure you're receiving as much as possible.
Fund an HSA on top of a retirement plan
Maurie Backman: You're probably aware that it's important to save diligently for retirement in a dedicated savings account like an IRA or 401(k) plan. But on top of that, there's another account it pays to take advantage of -- a health savings account, or HSA.
Many people fund HSAs with the intent of withdrawing funds for near-term medical bills. But the great thing about HSAs is that unlike flexible spending accounts (FSAs), they don't expire. You can contribute to an HSA throughout your career, leave that money untouched, and then use it to cover your healthcare costs in retirement, which will likely eat up a large chunk of your income.
HSA contributions are made with pre-tax dollars, so there's immediate savings to enjoy by funding one of these accounts. Also, any money you're not spending from your HSA can be invested while it's in your account, which means you can really grow your balance into a sizable sum. And any gains in your account, as well as withdrawals, will be yours to enjoy tax-free as well provided you spend that money on qualified medical expenses.
The only catch with HSAs is that to qualify, you must be enrolled in a high-deductible health insurance plan. In 2021, that means having an individual deductible of at least $1,400 or a family level deductible of at least $2,800. The rules for HSA eligibility change from year to year, as do the annual contribution limits, so it's important to keep tabs on them as you go. But if you're looking for a way to enjoy a world of tax savings, all the while setting funds aside for one of your largest senior expenses, then an HSA may the way to go.
Bank your raises
Christy Bieber: For many people, it's difficult to save enough for retirement because there are so many pressing financial needs to fulfill in the moment.
But there's a simple trick you can do in order to invest more effortlessly. You can commit to diverting future income increases to your retirement savings. So, if you were saving 10% of income now and got a 2% raise, you'd immediately start saving 12% of your income once the increase goes through.
If you take this approach, whenever you get a salary bump, you should immediately arrange to have the extra money automatically invested in your 401(k), IRA, HSA, or other preferred retirement savings account on payday.
See, when you get a raise, you aren't reliant on the money from it yet since you've been living on your current income. If you immediately start contributing that money to your retirement savings before you get used to it, you won't miss the money at all.
If you do this each time your income increases, in just a few years you'll ideally be able to work up to saving at least 10% to 15% of your income -- all without any additional major sacrifices that can be hard to sustain.
By saving your raises, investing in an HSA, and taking steps to maximize your Social Security benefits, you should hopefully end up with plenty of money to enjoy the retirement you deserve after a lifetime of hard work.