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Most Americans will either have to or want to retire one day. With the massive population of baby boomers out there, millions of them already have started their retirement and millions more will be retiring every year for the next decade or more. To have a good retirement generally requires a lifetime of planning, but for millions of Americans there just is not going to be enough in Social Security and basic retirement funds to make those golden years all that golden.

24/7 Wall St. frequently has looked at long-term planning issues around investing and retirement. The good news is that if you are set to retire in the immediate years ahead, there is effectively zero risk that your Social Security benefits will not be there for another decade or two. The bad news for the majority of the population is that most people will not be able to live very well only on Social Security alone. Even adding in retirement funds may not make those golden years all that pleasant without some additional self-help. You need to take action and make an effort to help boost your income and cash available immediately and in the years ahead.

While Social Security is safe for the boomers and elderly, younger generations have very low expectations. Their expectation is that Social Security will not be there for them at all, or if it is there the benefits might be greatly reduced. All this makes it imperative for people of all ages to begin thinking about how to supplement their retirement as early as possible.

Investment advisers commonly tell clients to have saved $1 million, $2 million or more to be able to enjoy retirement. Even if you aren’t working any longer, those pesky costs from food, insurance, medicine, transportation, clothing, shelter, utilities, bills, vacations and entertainment all will keep adding up every month. We previously provided a basic plan for most ages on how to save that $1 million for retirement, and that is very attainable, but the reality is that most people just aren’t anywhere close to having saved that much money.

There are some basic issues that need to be considered about funding a proper retirement and taking a reality check about just how golden your future golden years will be. It is assumed that you are going to have some Social Security, if you are already near retirement, but the statistics from government and independent researchers show that an additional retirement account or other savings have to be in place. Here are some basic stats on Social Security, retirement income and so on:

• The average monthly Social Security benefit paid to retirees in 2019 was said to be about $1,461 per month, and the maximum benefit at full retirement age was $2,861.
• According to a May 2019 report from Fidelity, the average 401(k) balance was $103,700 and the average IRA balance was $107,100. These figures are just inside of Fidelity, but the number of people with $1 million or more in their 401(k) was 180,000 and the number of IRA millionaires was 168,100.
• The Social Security Administration (SSA) website indicates that the average life expectancy for those turning 65 today is 84.0 years for a man and 86.5 years for a woman. One in three is expected to live past 90, and one in seven will live past 95.
• Census data from the 2018 American Community Survey showed that the median U.S. household income was $61,937. This varied widely from state to state, from under $45,000 in Mississippi and West Virginia to over $80,000 in Washington, D.C.; Hawaii; Maryland; and New Jersey. Households maintained by those aged 45 to 64 had the highest median household income in 2018 at $75,289.
• Early withdrawals of 401(k) and IRA assets can destroy your retirement, and helping your adult kids may be blowing your own retirement.

Add all this up and here is what it means ahead for Joe Retiree. Even the maximum monthly Social Security benefit is unlikely to go very far in your retirement, and the average 401(K) and IRA accounts are likely to add only a few thousand dollars per year in income.

Here are 10 simple efforts that can boost your income and give you extra cash to make your retirement really feel like they are the golden years.

1. Knowing When to Begin Collecting Social Security

Knowing how to time your Social Security payments is a critical part of retirement for most Americans. Your mandated retirement age of 65 to 67 depends on what year you were born, and the SSA website shows a table of scheduled benefits. Some people choose to start taking their Social Security benefits at 62 years of age, while others choose to delay their benefits until age 70.

That SSA table shows a breakdown of how much more you get per month for delaying or how much less you receive for starting early. For anyone born 1960 or later, the full retirement age is 67 years old. Taking Social Security for those born 1960 or later at age 62 reduces monthly payments by 30% (to $700 for each $1,000 eligible at full age), and delaying Social Security until age 70 turns a $1,000 benefit into roughly $1,280. Taking money sooner or later depends on needs, lifestyle, how long each person reasonably expects to live and many other factors.

Don’t forget: if you start taking Social Security before the mandatory age of 70, you can always choose to interrupt the benefits and let those monthly benefits grow.

While you have been paying into Social Security your whole life ahead of retirement, it is expected that you will have paid into a company-sponsored 401(k) or IRA account as well. A Roth IRA does not have a mandatory withdrawal, but traditional retirement accounts force you to take minimum distributions once you reach age 70½.

Managing these mandatory withdrawals is crucial, particularly if Social Security and retirement accounts alone do not add up to enough to live on. A general rule of thumb is to withdraw 4% to 5% of your retirement account in any given year. It is also imperative to use your mandatory withdrawals before dipping into nonretirement sources of investments. Not taking a required minimum distribution can generate a 50% excise tax on the amount that was required to be but was not distributed.

3. Rotating Assets to Income

Looking at the bottom-line of your personal balance sheet and seeing a value of $500,000 or $1 million (or $10 million) must feel great. There may still be a potential problem that people who are retired or about to retire must avoid. Some assets may produce no income at all, and some assets actually may cost money to hold on to.

It is not uncommon at all for retirees or those nearing retirement to have valuable assets like gold or silver, fine jewelry, art, antiques and collectibles, or even raw land. These may have a value that goes up or down over time. That said, think about these issues: gold and silver pay no dividends, jewelry that is never worn is effectively cash you can’t use, and getting money out of art or antiques is far more difficult than it sounds. Many collectibles (sports cards and memorabilia, stamps and so on) rise in value or have a stated value in auctions, but having too much money in them may be keeping your assets from paying you during your retirement. You also may have to outlay cash to keep them insured against fire, theft or other means of loss outside of your normal homeowners insurance.

Owning raw land can generate great long-term gains in time, but there likely will be ongoing maintenance costs, and the owner likely has to pay higher and higher property tax every year.

4. Dividend Stocks

While there will be some Social Security income, and likely some retirement account income from a 401(k), IRA or other pension product, one source of extra income can come from dividend stocks. A general rule of thumb is that dividends can be responsible for 50% of total returns over time, and those dividend payments by companies can be used by retirees to help supplement their retirement needs.

As of early October 2019, the median yield of Dow Jones industrial average stocks was about 2.5%, and the median yield of the dividend payers within the S&P 500 was closer to 2.3%. That’s far better than the 1.5% from the 10-year and 2.0% of the 30-year Treasuries. It’s important to not chase dividends that are hard to understand or that are higher than a company’s traditional earnings, and there are many companies and themes that can help kick in extra income every quarter via dividends.

As a rule, utilities, consumer products, pharmaceuticals, beverages and other consumer staples have been considered the safe and defensive sectors for retirees. The Dividend Aristocrats have raised dividends for at least 25 consecutive years, and nearly a dozen large cap stocks have raised their dividend for close to or over 50 consecutive years.

5. Bonds, Other Than Treasuries

When investors hear about the “bond market,” they are generally referring to what’s going on in Treasury yields. Retirees traditionally have invested much of their retirement in Treasury bonds for that ultimate safety of principal and for long-term predictable interest payments. The problem in late 2019 is that the 1.5% yield from the 10-year and 2.0% of the 30-year Treasury are insultingly low.

By selectively looking at corporate bonds or even municipal bonds with investment-grade credit ratings, retirees can juice up their income in retirement better than just in Treasuries. The benefit of municipals over corporates is that municipal bonds are generally exempt from federal taxes, and they are not taxed by many states either. It has become quite common for a corporate bond or a municipal bond to have close to 1% more in additional yield on an after-tax basis compared with their Treasury equivalent maturity.

6. Saving Money Beats Making Money: Coupons, Deals, Timing

It should be obvious that spending money is the opposite of making money. That said, there is the old adage that “a penny saved is a penny earned.” What the adage doesn’t tell you, outside of needing to say “dollar” rather than penny, is that a penny saved is actually better than a penny earned. The reason is simple enough: you have to pay taxes on income, but the money you spend is using after-tax dollars.

Using coupons, shopping for the best prices, going to price-matching stores and looking at prices online absolutely will save you money on many items you have to buy to live. It’s also important to know the timing of purchases in this effort, for items like airlines, peak travel times, avoiding surge pricing, considering seasonality, seasonal retail sales and looking at the “manager specials.” Saving money may not sound like direct income, but it will increase the available money for other ongoing expenses every month.

Being retired might sound like it is a time to relax and enjoy those golden years. That doesn’t mean you have to sit at home doing nothing, and it doesn’t mean you cannot do anything for work or money again. Many people simply could not stand the idea of never having to be anywhere and not feeling like they are somehow contributing to society.

Many retirees volunteer, but many retirees also take gigs, side jobs, seasonal jobs or house sitting, or they act as a temporary worker. Some retirees also use their life-learned skills and experience to do ongoing freelance work, to act as a consultant or to be a paid mentor. This allows a retiree to bring in additional income without having to recommit to a life of work, and some retirees do this on a very limited basis. Every dollar you bring in from outside of your own assets and nest egg will slow down how fast you might deplete your reserve cash and investments.

8. Reverse Mortgages

Hopefully by the time you retire you own your home outright. Many people don’t, but those who no longer have a mortgage or who are close to the end of their mortgage can begin considering a reverse mortgage. This strategy does not come without controversy, and it may have the consequence of lowering the value of the estate handily by the time all is said and done.

For those people who own their homes outright and who are aged 62 and above, a reverse mortgage effectively taps into the equity balance of a home and pays that money out to the homeowner while still not having to leave home.  This money will supplement ongoing retirement income and can be paid out monthly. There are more safeguards today than in the past, and the business of reverse mortgages is much more regulated than it used to be. Having a reverse mortgage is not a good fit for every retiree, and they can be rather complex, but it is a great fit for some who are soon to be retired.

9. Annuities

The world of annuities is complex, and many critics have chastised this theme due to high fees, low returns and those complexities. There are many types and variations of annuities, but a simple straight life annuity is an insurance contract in which the owner contributes money into the annuity and then begins receiving payments at a set date for the remainder of his or her life.

They may not be sexy, and they might not show major growth at the current time, but this will lock in payments to the owner of the annuity for the rest of their life. One benefit to annuities is that the payments made to the recipient are generally considered to be a mix of income and a return of capital, so generally only the income portion is taxable income. Another benefit is that annuities may be shielded from any lawsuits or creditors down the road.

10. Cleaning Out the Clutter

It’s no secret that Americans accumulate a lot of “stuff” over the course of their lives. Some of those belongings may be worthless and have a limited life. Other keepsakes may have a high value, such as fine art, jewelry, antiques, sports memorabilia, other collectibles, gold and silver and so on. Beyond those and other items listed above, a quick look through your house, attic, garage, basement and closets is likely to make you realize you have too many belongings that you don’t care about, don’t want or just don’t need anymore.

By using eBay, Craigslist, Facebook, auction houses and other venues, you can monetize most belongings in some form or fashion. You can even have garage sales if your neighborhood allows it. If you have “stuff” you are never going to use but it has value, you can sell these off in stages or all at once. Congratulations: you just scored extra cash to help boost your retirement.

There is a saying “You can’t take it with you after you die” and your friends and family who have to clean out your home later will appreciate that you got rid of nonessential things.

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