If you are like many seniors struggling to control your expenses in retirement, you’re not alone. There is no need to remind you that everyday items are rising. At a time when prescription drug prices, health care costs and food expenses are on the rise, seniors are feeling the pinch on their wallets.
To make matters worse, Social Security beneficiaries received no increase in 2016 and will receive just a 0.3% cost-of-living adjustment to their monthly checks in 2017.
With seniors facing such serious financial stresses in retirement, it’s no wonder that a recent survey from Wells Fargo found that 22 percent of middle-class Americans say they would rather “die early” than not have enough money to live comfortably in retirement.
So what are some ways you can manage your growing retirement costs?
- Maximize Your Social Security Benefits
Attempt to work longer in your later years so that you don’t significantly lower your monthly retirement benefit. Your benefit is based on your highest-earning 35 years of work history. It’s important that you try to stay in the workforce, even if that means pushing back your retirement.
If you do manage to stay in the workforce, attempt to maximize your income, even if it means getting a second job. Boosting your yearly income will pay off in benefits over the long run.
- Postpone Taking Benefits
If you can, try to wait until you are at least in full retirement age to start claiming your benefits. According to the Social Security Administration, your full or “normal” retirement age is between 65 and 67, depending on what year you were born.
Electing to take earlier distributions will reduce your monthly check amount for life. If you can wait until you are age 70, this strategy will get you what the Social Security Administration calls “delayed retirement credits.” Your benefits increase 8 percent each year that you delay taking Social Security income until age 70. Waiting until you hit 70 translates into about a third more income for life.
- Evaluate your Life Insurance Needs
Take a look at your life insurance policy and evaluate whether it’s still needed or affordable now that you’ve entered the retirement years. Many seniors are surprised to learn that their life insurance policy is their personal property and they have a right to sell it, just like any other asset in their portfolio. Some seniors decide the coverage just isn’t needed anymore because their kids are no longer dependent on Mom and Dad for money. Other seniors have seen their premiums go up in recent years and now find the policy is too costly to maintain.
If one of those scenarios hits close to home, you may want to consider selling the policy to a third-party investor for immediate cash payment, known as a life settlement transaction.
Candidates for life settlements are typically aged 70 or older, with a life insurance policy that has a death benefit of more than $100,000. The sale of a policy can bring you roughly seven times more money than the cash surrender value of your policy.
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