Many Americans are rightfully worried about how they'll make ends meet in retirement. Indeed, according to the 2016 Retirement Confidence Survey of the Employee Benefit Research Institute, about 26% of respondents said they had less than $1,000 saved for retirement, suggesting that many people are not going to have adequate funds come retirement. What can you do if you're one of them, and even if you're not but just want maximum income in your golden years? Well, here are three proven ways to boost your income in retirement, according to our contributors.
Brian Feroldi: One surefire way to boost your income during your golden years is to take a part-time job . While that might not sound like the most appealing prospect after just having worked for four decades, you should know that there could be other benefits to working beyond just financial gain.
Researchers at the University of Miami examined a study published by the Center for Disease Control that looked at the health of older adults who chose to continue working past age 65 compared to those who stopped altogether. They found that adults who held white-collar jobs and opted to stop working were nearly three times more likely to rate their health as "fair" or "poor." In short, choosing to work past age 65 could be good for both your wallet and your health.
That result may not be all that shocking as many find that working part-time can be a good way to keep mind and body active, and many believe that working brings social benefits, too.
If you enjoyed your career and want to stick with, then it might be worthwhile to ask your employer if they would be open to you working part-time with a flexible schedule. Retirement could also be a great time to pursue work in a new field that relates to one of your lifelong passions.
Before you say yes to any job, however, you should be aware that there could be an impact to your Social Security benefits if you haven't yet reached full retirement age. If this applies to you, you should dig into the rules that govern earning an income while collecting benefits to see how it might affect you.
Matt Frankel: Delaying Social Security isn't a practical option for everyone, but if you can afford to do it, it could pay off in the long run. The vast majority (about 90%) of people sign up for Social Security at or before their full retirement age, and sometimes this is due to unavoidable factors, such as an unexpected job loss or a health problem that prohibits working. However, many people just take it as soon as they can.
The problem with taking Social Security early is that your benefits will be reduced -- for life. Claiming Social Security before normal retirement age (66 for those retiring now) reduces benefits be 6.67% per year for the first three years early and 5% per year beyond that. On the other hand, delaying Social Security beyond normal retirement age results in a permanent increase of 8% per year until age 70.
In other words, if your normal retirement benefit is calculated to be $2,000 per month, filing at age 62 would result in a reduction to just $1,500, while delaying until 70 would increase the payment to $2,640. This is a big difference. While I'm not saying that it's necessary or practical for most people to wait until the last possible minute, delayed Social Security can be a good place to start if you're concerned about your level of income in retirement.
Selena Maranjian: An appealing way to increase your income in retirement is via one or more annuities -- as long as you get the kind that serves you best. Annuities exist in several key forms – immediate vs. deferred (paying you immediately vs. starting at some point when you're older), fixed vs. variable (certain payouts vs. payouts tied to the performance of the market or part of the market), lifetime vs. fixed period (paying until death or paying for a certain span of time), and so on. Annuities can cover a single life or the lives of a married couple.
Immediate or deferred fixed annuities are smart options for many retirees as well as for those approaching retirement. Be wary of indexed and variable annuities, though, as they are more problematic and less suited to many people, because they charge steep fees and/or carry hefty early withdrawal penalties.
An immediate fixed annuity can provide you with monthly checks to live on for the rest of your life. As an example, a 70-year-old man in Colorado may be able to receive about $636 per month in annuity payments by buying a $100,000 annuity from an insurer with a strong credit rating. That's about $7,600 per year. With $300,000, he might get a more useful $23,000 per year.
It might not seem like you're increasing your income in retirement with an annuity, as you pay for the monthly checks you receive. But if you live a long time, you can receive much more than you might have had you invested in other ways. And if your nest egg doesn't seem likely to offer sufficient guaranteed income to last the rest of your life, one or more annuities might be the answer.
These are just some of many ways that you can boost your income in retirement -- something that many of us will want or need to do in our golden years. Think about the issue now, so that you can be more ready to take action when the time comes.