8 Ways to Increase Your Retirement Income WITHOUT Work or Saving More

this video discusses eight ways to increase your retirement income without getting another job or without saving more coming up next on holy Schmidt holy Schmid put simply this video is about increasing your cash flow in retirement your spendable cash without actually doing more in terms of working or investing well there's no such thing as a free launch there are some things that are close or take social security for example most people watching this channel know that if you wait to take Social Security your payment goes up for every year you wait past age 62 your Social Security payment goes up by approximately 6% plus inflation once you hit full retirement age and for most of you that's between age 66 and 67 it goes up by 8% plus inflation all the way up to age 70 this fact is supremely important because a lot of people don't retire at age 62 yet the majority of people who take Social Security do so at age 62 simply by understanding how the Social Security tables work and knowing what your lifestyle is going to look like in the future will go a long way to helping you make the right decision with this particular source of cash flow next understand how much of your assets you can really take use a tool not a rule there are a lot of heuristics about when to take funds when you retire the 4% rule is one of them that rule simply stated says that you should take 4% of your available assets plus inflation and that's the maximum you can take in any given year but is that rule right for you what if you're the fire type financially independent retire early and you retire at age 45 the 4% rule says that you can take out a certain amount of money for the next 40 years it might work if you get the right return but then again it might not you just don't know but what if you're age 65 instead of 45 now the years ahead look more like 20 years instead of 40 and if you even get a modest return on your Investments you're going to leave money on the table in most cases the fact is having an accurate model rather than a horis means that you can probably take more out you can get this information from a good financial adviser of course particularly if you're trying to determine the interplay between Social Security and how much you take out from your assets if you're not going to use a financial adviser there are financial calculators out there at sites like AARP there also sites like 401K providers Fidelity T price Etc but I would try to focus in on the sites that are aligned with you in terms of the outcome not aligned with you in terms of having you put more money in the institution getting this right means that you may be able to spend more money because you've done the work you've got the math right I will say as a category of people who watch this channel a lot of you actually spend less than you actually could because you're concerned about running out of money I can see in the comments quite regularly people talk about the fact that they can't spend as much as their model says that they can spend it's not because they don't have something to do with the money in most cases it's because they're a little apprehensive next get free money from your company employer let me explain 177% of the people out there who qualify for a 401k don't actually contribute to a 401k that's a big number and many of those individuals are foregoing the company match simply because they're not contributing at least a minimum amount to maximize the company match now you say Jeff you said at the beginning I'm going to show you how to increase your retirement income without boosting your savings this sounds like I'm boosting my savings let me address this one first if you're not investing your company 401K and there's one available to you there's a reasonable chance that you're not investing in anything at all if this is you you need to start investing in your 401k Pronto however if you're investing but you're not investing in your 401k you might actually have your sequencing wrong particularly if you have a company match but even if you don't the pre-tax Force savings is a very good reason to put money into your company 401K similarly the statistics show that people who have an FSA or HSA health savings account the majority of people don't use those people think why bother it's just a little bit of tax savings and it might not be worth the hassle but if you're contributing an extra $500 a year or if you get an extra $500 back in free cash flow it's worth it over the course of many years ahead next hire a tax professional a tax accountant or a tax planner to help you plan your taxes in the future not just do your tax return let me explain for most people taxes are their single largest expense category yet A lot of people do their own taxes and very few actually have active tax planning for today in the future tax professionals don't just help you find tax breaks this year they help you plan for Life events in the future let me give you a concrete example straight out of the Lifestyles of the Rich and Famous let's say that you live in New York and you want to buy a home down in Florida that home is one that you plan on living in say four to 6 Months of the Year New York is a high income tax state Florida is a zero income tax state if you moved into that home and you live there for for 182 days you owe New York State income tax if you live there for 183 days in most cases anyway you would owe no New York State income tax one day New York income tax ranges from 4% to 10.9% depending on how much money you make Florida income tax is zero you'll need proper documentation of course but your tax planner can help you with that that conversation shouldn't happen when you're driving the moving van from New York to Florida though it should happen a year or two before tax planning is important for downsizing your home without paying capital gains doing a Roth conversion or planning your personal and business expenses and making sure that you know which is which to maximize your tax deductions available to you today and in the future and of course concluding a job and starting retirement is a pretty big taxable event you get the point the next point is what I call spending like a pro not like a budgeter there's a huge difference let me explain spending like a pro means you take all emotion out of your spending decisions you don't get caught up in the day-to-day activities that get your adrenaline flowing and your wallet opening you spend like it's a job with confidence a pure exchange of value and maximizing your own value is job one if I were to say to you are you an expert in your chosen field for the vast majority you would say yes if you were a paramedic and you arrived at the scene of a medical emergency you would know what to do and in what order no matter what the situation called for if you worked on a factory floor you'd know exactly how many widgets that you could put through the system on a given day you'd be really good at it there'd be no waste you were a pro but if you ask the average person if they have that level of confidence with their spending they fold like a house of cards most people don't spend like a pro they spend like a kid in a candy store even after 40 years of practice now I'm not talking about being cheap here I'm talking about someone who knows the exact value of the thing that they're buying those people have extreme respect for the people around them controlling your spending means that you're entirely aware of everything that's going on around you in other words you spend like a pro it's just business but controlling your spending means that you need to study money question unexpected items on your restaurant Bill even if they're tiny because it's not about saving the money it's what is that item doing there in the first place you don't get tricked into paying double the tip because there's a new line item out there called Hospitality charge which seems to be 18% about the same amount as a tip you ask what is this you aren't afraid to pay for quality but you refuse to pay for Junk you don't get tricked by amateur bait and switch schemes and asking good questions is not embarrassing it's just business the next way to boost your retirement income by at least 5% by the way in most cases is to wait one year more before you retire here's is a simple fact while none of us know for sure how many days we have left one year from today we will have 365 less of them why is this important if you're age 63 the average lifespan at age 63 is approximately 83 so another 20 years it's a little less if you're a male it's a little more if you're a female if you spread your hard-earned Investments out over the next 20 years you receive approximately 5% per year on those assets but if you wait exactly one year instead of dividing everything by 20 you're dividing it by 19 that's an extra 5% on the amount that you receive every year next downsizing your home if Done Right downsizing can have a tremendous impact on your quality of life and your spendable cash in retirement let me explain first let's talk about downsizing to make sure we're all on the same page the definition of downsizing that I'm referring to is taking your current home and either selling it if you own it or leaving it if you're renting it and moving into something less expensive this means lower taxes lower utility bills lower cost of living overall if you have less expenses then you have more free cash flow it's simple money in money out and selling if you are selling means you have more free Equity to invest or put in other areas of your life if you don't want to downsize consider renting out those rooms that are no longer used by your family members because you're paying for them and you're not getting any benefit whatsoever from the empty space another option is a short-term rental like say Airbnb or long-term rental if you maybe move down to a place like Florida from New York next is a reverse mortgage now to be completely candidate I'm not a huge fan of reverse mortgages however they do have a place but I would recommend proceeding with caution on this one and really understand what you're getting into to before you do it for most people the only way to really get value out of their home is to sell it but what if you're not ready to sell you have an asset that has value but you may plan on living in that home for the rest of your life or at least the foreseeable future what this means in actuality is that many times the person or people that realize the value of your home won't be you but it will be your heirs a reverse mortgage allows you to have access to the value of your home today instead of your heirs having access to it at a point in the future but here's why I don't like it but if you can get your mind around it maybe a reverse mortgage actually is right for you for most people their home equity is their single largest asset it is their firewall between where they are today and something really bad happening to them at a point in the future if you degrade that firewall before it's time then you may end up having nothing at the most critical point in your life when you need something the most so if you do want to access your homes value and a reverse mortgage first talk to a professional about it someone who has your best interest at heart a financial planner but also beyond that push it as far ahead into the future as you possibly can gang these are changing times for those in retirement this year we will see propositions from both sides of the aisle that talk about changes that will affect you and I will cover those here on the channel but in order for you to get access to that information please make sure you click subscribe and turn on notific ifications so that you get alerted the next time I post a video now more than ever I'll post at least once maybe even twice a week sometimes even three times a week if necessary to make sure that I get that information to you if you like this video check out that video on seven big purchases retirees almost always regret this is Jeff Schmidt thanks for watching

Channel: Holy Schmidt!

Views: 69,434

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Id: q6Mg6c6lV-E

Length: 12min 19sec (739 seconds)

Published: Thu May 30 2024