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11 Proven Ways to Increase Your Retirement Income – The Motley Fool

Many Americans today feel financially insecure. As many as 39% said they did not feel too confident or at all confident that they would have enough money to live in retirement after the Retirement Confidence Survey 2017.

How much money do you need for your retirement? The answer will be different for different people, and many of us will not accumulate our required amount. Fortunately, we can increase our chances of a happy retirement by taking a few steps. Here are 11 strategies that you can apply now or later to increase your retirement income.

  Paper airplane folded from a one hundred dollar bill, on cloudy sky background.

Source: Getty Images.

. 1
Get Rid of Debt

For starters, you can retire without a mortgage or other expensive debt, as that can weigh on you if you survive with a fixed or limited income. Retirement debt can affect your ability to make other necessary payments. If you can repay these debts before you retire, you can earn more in your retirement.

. 2 Making the Most of Retirement Savings

Tax-deductible retirement savings accounts such as IRAs and 401 (k) s are another great way to increase retirement income, because the more money you contribute to work, the more retirement you will have. There are two main types of IRA: the Roth IRA and the traditional IRA. In 2018, the contribution limit for most people is $ 5,500 and for both 50 and older, $ 6,500 in both types of accounts. You can earn even more with a 401 (k) account because it has much more generous contribution limits – for 2018 the limit is 18,500 for most people and 24,500 for the 50 or older. Especially consider Roth IRAs and Roth 401 (k) s (which are increasingly available) as they allow you to withdraw money tax-free.

The following table shows how much money you can earn over different periods different amounts:

Growth at 8% for …

$ 5,000 Invested annually

$ 10,000 Invested Annually

$ 15,000 Invested Annually

10 years

$ 78,227

$ 156,455

$ 234,682 [19659018] 15 years

$ 146,621

$ 293,243

$ 439,864

20 years [19659015$247115

$ 494,229

$ 741,344

25 years

$ 394,772

$ 789,544

$ 1.2 million

30 years

$ 611,729

$ 1.2 million

$ 1.8 million

Author's calculations

3. Invest in Dividend Income

Fill your portfolio with a set of dividend paying shares and you can earn income without having to sell stocks to generate money. For example, a $ 400,000 portfolio that has an average total return of 3% will generate about $ 12,000 a year – a solid $ 1,000 a month. Dividend income is not guaranteed, but if you distribute your money to a number of healthy and growing companies, you will likely receive regular and growing payments. Here are a few notable stocks with significant dividend income:


Recent Dividend Yield



General Motors

4.2% [19659041] National Grid [19659039] 5.1%





Verizon Communications

4.9% [19659034] Data source: The Motley Fool.

A dividend-oriented Exchange Traded Fund (ETF) may also be a good option and offer immediate diversification. For example, the iShares Select Dividend ETF (DVY) has yielded about 3.2% lately. Preferred stock is another way to go. The iShares U.S. Pat. Preferred Stock ETF (PFF) recently returned 5.6%

4. Keep Retired

Another way to increase your retirement income is to work in your early years of retirement – at least a little. Working just 12 hours a week at $ 10 an hour will generate about $ 500 a month. Given that many retirees feel restless and a little lonely in retirement, a part-time job can help by providing more structure and regular opportunities for contacts every day.

Here are some ways: You could become a cashier local retailers or deliver newspapers. You could write or edit some freelance works or work graphically. You can teach children in subjects you know well, or give music or language lessons to adults or children. Make and sell furniture or sweaters or candles. Consult – maybe even for your former employer. Babysit, dogs go for a walk or do some handjobs. Nowadays the internet offers even more possibilities. You can make jewelry, soaps or puzzles and sell online or write e-books that you publish online yourself.

  Stack of hundred-dollar bills with padlock imprisoned

Image source: Getty Images. 19659005] 5. Blocking Income with Fixed Annuities

Give some consideration to fixed annuities as they can deliver regular income, and favor them over variable annuities and indexed annuities, which often require steep fees and sports-restrictive conditions. Fixed annuities are much simpler instruments and they can begin to pay you immediately or deferred. The following are examples of the type of income that different people could receive in the form of an immediate fixed annuity in the current economic environment. (Higher payments are usually offered in periods of higher interest rates.)

Person / Persons


Monthly Income

Annual Income

65 Year Old Man [19659065] $ 100,000

$ 546

$ 6,552

65-year-old man

$ 100,000

$ 522

$ 6,264

Seventy-year-old man

$ 100,000

$ 628 [19659067] $ 7,536

70-year-old woman

$ 100,000

$ 588

$ 7,056

65-year-old couple

$ 200,000

$ 929

$ 11,148

70- year-old couple

$ 200,000

$ 1,028

$ 12,336

75-year-old couple

$ 200,000

$ 1,180

$ 14,160

Data source: sofortannuities.com [19659002] A deferred pension can also be smart and starts paying you at a later date, for example, when you reach a certain age.

. 6 Consider a reverse mortgage

Also, look at a reverse mortgage. It is essentially a secured loan from your home. A lender will provide income during your retirement (often tax-free), and this money does not have to be repaid until you stop living in your home – such as after moving to a nursing home or dying. It has some downsides, such as requiring your heirs to sell your house unless they can afford to pay off the loan, but if you really steal money and nobody counts on inheriting your home, it may be a solid solution.

. 7 Borrow Your Life Insurance

Many people do not think about this strategy, but under the right circumstances, they can provide the income they need. If you have a life insurance policy that nobody is dependent on – for example, if the children you wanted to protect with it are now grown and independent – you might consider borrowing something. This can work if you have bought a "permanent" insurance such as life or universal life, and no term life insurance, which generally only takes as long as you pay for it. You will reduce or eliminate the value of the policy with your payouts, but if nobody really needs the ultimate payoff, it may make sense. In addition, the income is typically tax-free.

  stacked moving boxes, labeled toys, household goods, etc.

Image source: Getty Images

8. Moving to a less expensive home or region

You can also supplement your retirement income by spending less on retirement at home. You can achieve this by downsizing to a smaller house and / or moving to a region with lower taxes or lower living costs. This strategy can reduce your property taxes, insurance costs, housekeeping costs, utility costs, landscaping bills and so on. The median in Massachusetts, for example, last at $ 341,000, in Colorado, however, only at $ 264,600, in South Carolina at $ 143,600 and in Arkansas at $ 114,700

9. Collect Interest

Parking money in interest-bearing assets is a strategy that varies in effectiveness as the economic environment changes. When interest rates are high, it's great. In times like these, not so much. If you park $ 100,000 in certificates of deposit and pay 1.5% interest, you'll earn $ 1,500 a year, not a very helpful sum. In 1984, however, the quotas for five, one-year and six-month CDs were in the double-digit range. If you could get 10% for an investment of $ 100,000, you would enjoy $ 10,000 a year, which is about $ 830 per month. If interest rates are low enough, they will not even keep up with inflation, which averages about 3% a year over long periods of time.

Bonds are another interest-bearing option, but the safest (by the US government) tend to pay moderate interest rates, especially in low-interest rates. But if you have a lot of money, you can make that strategy work by buying a variety of bonds that mature at different times and generate income over many years.

10th Retirement later

Here is a very powerful strategy, but one that many people would rather not deal with: Go back later than scheduled. If you can work two or three more years, your nest egg can grow while you turn it off to type it. (In other words, it can ultimately bring in more income, and it will have to do so for a few years.) Maybe you'll enjoy your employer-sponsored health insurance for a few years, maybe even while you're still a few years away. Value of appropriate funds in your 401 (k).

Imagine that you are slipping $ 20,000 a year for 20 years, and growing at an annual average of 8%, growing to about $ 494,000. If you can continue for another three years at an average of 8%, you will have more than $ 657,000! That's more than $ 160,000 extra just to postpone retirement for a few years.

. 11 Maximize Social Security

There are a number of ways to boost your social security income as well. You can increase or decrease your benefits by starting to collect Social Security sooner or later than your full retirement age, which is 66 or 67 for most of us, and you can make some smart moves by coordinating with your spouse. For example, if you and your spouse have very different earnings data, you could capture on time or early the benefits of the spouse with the lower working life while delaying the services of the higher-earning spouse. In this way, you can enjoy both a little earlier, and when the higher earner hits 70, you can pick up their extra large checks. If even this higher-earning spouse dies first, the spouse with the smaller earnings history can collect these larger benefit checks.

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