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Tips to help maximize your retirement income

Kelly Kowalski, Cliff Noreen, and Bronwyn Shinnick

Posted on January 05, 2024

Our executives and experts team up to write educational articles, covering a variety of financial topics such as life planning, college savings, and retirement.
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Lay out four areas for you to review to better understand your retirement picture.

Provide calculators to help crunch your retirement numbers for savings and income.

Note financial options or activities that might help ease income worries in retirement years.

Given today’s retirement realities, it’s crucial to think about how you define retirement and how you intend to manage your income, typically a combination of money from retirement accounts, Social Security payments, and proceeds from investment contributions made over the years.

And it’s likely to be a complicated financial plan, given that “traditional” retirement — where people went straight from working full time to not working at all — has changed. We’re living longer than previous generations, which means we can explore new interests and spend time with the people who matter most. (Related: Uncomfortable truths about retirement)

Retirement income strategies

This means we need to find ways to stretch our income further. To do that, you need to:

Many of us are working longer than retirees in the past. Instead of retiring around age 62, many of us are likely to continue working in some capacity into our 70s. (Related: Potential retirement obstacles)

The transition may seem intimidating at first, but this challenge can bring amazing possibilities. You may be able to gradually scale back at your current job, turn a hobby into a business, or even launch a “second act” in a new career instead of transitioning to a life of leisure all at once.

Know what’s coming: Social Security

There are several benefits to having a financial plan and being thoughtful in your retirement approach. It may allow you to continue to earn income and have more time to save. And the longer you work, even if it’s just a little, the more you can delay the need to tap into your retirement savings, pensions, and, importantly, Social Security.

Generally, the longer you can hold off on collecting Social Security, the better. If you want to find out what your estimated monthly Social Security retirement benefit will be, check your Social Security statement. The Social Security Administration mails copies of this statement to workers over 60 who’ve paid Social Security taxes. Workers of all ages can also access their statement by visiting the Social Security Administration website.

While you’re there, think about creating your own personal “myAccount” page. Whether you are close to retirement or not, it’s one of the best ways to begin learning about this important benefit. (Related: Filing for Social Security benefits)

It’s not a bad idea to review the earnings record that Social Security has on file for you. It’s better to correct any errors sooner rather than later.

Know what’s coming: Your own retirement savings

Beyond Social Security is the money you may have saved individually for retirement, either through company retirement plans like 401(k)s or pension programs, Individual Retirement Accounts, investments like annuities, bonds, stock portfolios, and mutual funds.

Some of the income from these investment and retirement vehicles will likely be more predictable than the money and cash flow from others. Dividends on stock holdings, for example, can fluctuate significantly over time versus the payments from certain annuities. (Related: Understanding diversification)

While you do the inventory, you may want to consider consolidating accounts as way to simplify tracking your holdings and cutting down on possible account fees.

The important point is to know what you have in terms of retirement holdings and what you can expect from them in terms of cash flow.

Do the retirement math

Then compare that to what you spend, both out of necessity and out of discretion. Reviewing your bills over the last three years is a good starting point for getting a handle on these expense figures.

To get an overall sense of what your financial picture may look like in retirement, calculators are a great place to start. Here are two that can help you determine where you are in terms of saving and spending:

For those of you who find yourselves with a big gap between how much you think you’ll need for your retirement plan and how much money you think you’ll have, you may want to consider a phased approach to retiring. (Related: A roadmap to retirement)

Your calculations can also help you start to consider plans for drawing down the principal in whatever retirement accounts you may have. In addition, provided you have the right type of life insurance policy in place, you could also calculate in the possibility of tapping into life insurance to supplement your draw-down plan. (Related: How life insurance can supplement retirement income)

Indeed, the consequences of such calculations in today’s changing demographics can have significant financial implications for your retirement. For example, in the past the “four percent rule” was a rule of thumb often used to guide the amount of money to withdraw annually from retirement accounts. A 4 percent rate was considered high enough to keep pace with inflation while low enough to sustain a retirement portfolio for a number of years.

However, many critics argue the four percent rule is outdated. People are living longer now, increasing the odds of someone outliving their savings if withdrawals are too aggressive. And over the past few years interest rates have been very low, dampening returns on conservatively positioned retirement accounts. (Related: The ideal retirement portfolio withdrawal rate)

New tax proposals and changes to Social Security rules can also influence the appropriate financial strategy and vehicles for using various retirement funds. (Related: Does an annuity fit your retirement goals?)

Such considerations can get complex and have significant financial consequences in the future, depending on individual circumstances. In such situations a financial professional can talk you through different retirement scenarios for your circumstances, and help you plan accordingly.

Ideas for earning extra income

You may wish to consider part-time employment to make ends meet in retirement. The first place to start is your current job. As an experienced employee, you have a lot of value to offer your company. Your employer may be open to having you working part time, or move into a role that’s less demanding or requires fewer hours. Some people leave their full-time jobs but continue to work in their field as a contractor or consultant. This gives you the freedom to pick and choose how much you want to work.

Another option is to share the professional expertise you’ve gained over the years with others. Some of the best and most inspiring tutors, instructors and speakers out there are people in semi-retirement.

Remember there’s no rule saying you have to stay in your current profession. Some people use their retirement to reinvent themselves in completely different careers or businesses.

For example, author Frank McCourt didn’t start writing until he was in his sixties, after a thirty-year career as an English teacher. His memoir, Angela’s Ashes, became a runaway bestseller and won the Pulitzer Prize. Not bad for a first effort.

With help from online marketplace and auction sites like Etsy and eBay you can turn a hobby — anything from knitting sweaters to collecting antiques — into a business. There are also websites like Taskrabbit and Craigslist where you can find odd jobs or offer your services for things like tax preparation, repairs, babysitting or eldercare. (Related: Financially beneficial retirement activities and hobbies)

Enjoy the retirement you deserve

Thinking about what you’ll do or how you’ll manage your retirement income may feel overwhelming. Planning, doing a little research and asking questions can help make a real difference. Remember, there are opportunities to earn a little extra income in retirement so you can feel more confident about your financial security — while still enjoying the leisure and freedom you deserve after years of hard work.

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This article was originally published in November 2016. It has been updated.


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The information provided is not written or intended as specific tax or legal advice. MassMutual, its employees and representatives are not authorized to give tax or legal advice. You are encouraged to seek advice from your own tax or legal counsel. Opinions expressed by those interviewed are their own and do not necessarily represent the views of Massachusetts Mutual Life Insurance Company.
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