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Tips to Help You Expand Your Retirement Income

Dana Larsen
By Dana LarsenJanuary 31, 2019
Tips to Help You Expand Your Retirement Income

Life expectancy is increasing, yet many families haven’t planned for a long retirement. If you, a parent or senior loved one are looking to expand your retirement income, here are a few tips.

How to Expand Your Retirement Income

Life expectancy is increasing with today’s medical and technological advances, yet many families are not adjusting their retirement planning to include income for a longer retirement or for senior living expenses.

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In fact, the average life expectancy for men is 77 years and 81 years for women today, which is eight years longer than most people plan for in retirement according to a recent Nationwide and InvestmentNews study. Many families are feeling financially pinched as a result.

If you are financially strained or would like to find a way to expand you or a senior loved one’s retirement income, here are some ways to help increase your cash flow:

1. Be strategic with senior living expenses.

Senior living expenses are upwards of $6,000 in some states, depending on the type of care or state of care. Families can save money on senior living care by making strategic decisions like choosing a studio apartment, sharing a room or choosing a senior living community that is out of the city can save you hundreds, sometimes thousands of dollars each month. You also might qualify for a move-in special or price reductions if you simply do your research and ask the community about specials or time a move when a special is being offered.

Also, sometimes family-style or smaller communities offer less-expensive care, depending on the seniors’ need. Bottom line: Do your research to find a senior living situation that is within the family budget.

2. Enlist the help of a professional financial advisor.

Managing retirement expenses and a retirement portfolio can be a big job; especially if you’re having to dip into your own savings to finance senior living expenses. A good financial advisor can be worth the fees that you pay many times over by not only saving you money but giving you peace of mind that finances are in order.

A financial advisor has the ability to look at your situation from afar, to develop educated strategies and make observations that you may be completely unaware of because you don’t know the marketplace or tax rules like a professional. Not to mention, the financial landscape is getting more complicated and it’s important to get not only daily living expenses in order, but also make a long-term plan for the family estate and other financial affairs.

3. Have a portfolio strategy.

It’s important to make sure you or your loved ones’ investment portfolio is assessed periodically to minimize risk and strategize how to not outlive assets. Retirement income management is strategizing how your retirement savings will provide enough income to meet unique retirement needs. To do this, you need to set up or adjust a specific retirement portfolio that’s geared toward maintaining health expenses, retirement living and senior care.

Asset allocation, risk management and spending down investments in a smart way are all part of proactive financial management in retirement. You have to be careful with the timing for fee and tax purposes and move toward a more conservative portfolio in retirement. A professional financial advisor or fiduciary can help you assess your portfolio inventory to manage investments and avoid serious mistakes that can jeopardize your financial wellbeing.

4. Maximize Social Security.

Being informed about available Social Security benefits can help save you and your loved ones’ retirement money. For example, Social Security benefits are a major source of income for retirees, but far too many seniors have no clear idea of how these benefits work. In fact, according to recent data from the NHP Foundation, 62% of baby boomers are expecting too much from Social Security and over one-third have no retirement budget. Even worse, many seniors have major misconceptions about Social Security benefits that could affect their plans for retirement in adverse ways.

Timing benefit withdrawals and being aware of the many Social Security benefits available can help you maximize your families’ benefits, such as the spousal Social Security benefit and how the benefit can supplement additional investments.

5. Pick a health insurance plan wisely.

The health insurance coverage you choose can effect on how much you spend out-of-pocket on healthcare. In fact, according to Fidelity Investments, a 65-year-old couple retiring today will spend, on average, a total of $275,000 out-of-pocket on healthcare expenses. It’s important that you or your loved one is signed up for Medicare on time once eligible at age 65 to avoid paying a penalty premium every year. You can choose between original Medicare (Part A and Part B, often with Part D and/or supplemental plans) and Medicare Advantage plans. There are pros and cons to each, so it’s important to do your research.

Medicare doesn’t pay for everything, though, so it might be worth it to find additional health insurance options through a private provider. For example, Medicare will only cover a limited amount of at-home care or a short stay in a nursing home — but only under very strict conditions. To help you cover potential long-term care expenses, consider buying long-term care insurance to help ensure you don’t drain your retirement savings on unexpected medical problems.

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Dana Larsen
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Dana Larsen

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