Work longer and delay Social Security

Working longer not only delays taking money out of your retirement investments, which allows them to continue compounding earnings growth, but it also pushes back the age at which you’ll need to start collecting Social Security payments.

Take that $202,000 investment portfolio. Invested in a conservative portfolio returning 5% annually — the historical average return on stocks is 11.9% — that money would grow to $233,840 in three years. Assuming you’re following the 4% rule for withdrawals, that would amount to $9,354 per year — an increase of $1,274 each year.

As for Social Security, delaying retirement until after you reach your full retirement age increases the monthly benefit by 8% a year, until payments max out at age 70.

A Boomer born in 1955 would reach full retirement age of 66 years and 2 months in 2022, with an average Social Security benefit of $1,668 per month as of spring 2022. Delaying benefits for three years would see that amount increase 124% to $2,068 — translating into an extra $400 per month.

Add that to the increased payout from allowing your investments to grow, and that three-year delay before retiring adds $506 of income per month, or another $6,074 per year.

Simply add Capital One Shopping to your browser, and shop like normal. This free tool does the work for you.

Install Capital One Shopping

Find a “returnship” opportunity

Working part-time in retirement is another way to augment your investments. In fact, an increasing number of firms are encouraging older workers to cut back to part-time rather than retire entirely, and many companies are offering “returnships” for older workers who want to transition to a new field or type of job.

The part-time work doesn’t have to be especially high-paying either. Working 15 hours a week at the current federal minimum wage of $9.87 would net you $7,106 a year before taxes.

Sure, that doesn’t seem like much, but apply the 4% rule and that $7,106 of income is equal to adding $177,660 to your investment portfolio.

Cut your expenses

Finding ways to lower your expenses in retirement produces a big bang for each buck, because you’re saving after-tax money. Try to look for recurring monthly expenses you can cut because that’ll mean you see those savings every month.

Other savings opportunities include paying off a mortgage or other debt before you retire, downsizing your home, traveling in the off-season, taking advantage of seniors’ discounts, comparison shopping for insurance or going from a two-car household to one car.

Sign up for Credit Sesame and see everything your credit score can do for you, find the best interest rates, and save more money at every step of the way.

Get Started—100% Free

Max out your retirement accounts

When it comes to Individual Retirement Accounts (IRAs), anyone older than 50 can add $1,000 in “catch-up” contributions each year to a regular IRA or a Roth IRA, on top of the $6,000 per year general limit.

You need to be earning at least as much as you contribute to add to an IRA, and the annual contribution limit applies to all your combined IRAs.

If you’ve still got access to a pre-tax workplace retirement account, such as a 401(k), 403(b) or 457 Plan, you can contribute up to $20,500 a year — unless your plan sets a lower cap. In many cases, employers match set amounts of your contributions, which is about as close as you’ll get to free money.

Here's how to save up to $700/year off your car insurance in minutes

When was the last time you compared car insurance rates? Chances are you’re seriously overpaying with your current policy.

It’s true. You could be paying way less for the same coverage. All you need to do is look for it.

And if you look through an online marketplace called SmartFinancial you could be getting rates as low as $22 a month — and saving yourself more than $700 a year.

It takes one minute to get quotes from multiple insurers, so you can see all the best rates side-by-side.

So if you haven’t checked car insurance rates in a while, see how much you can save with a new policy.

About the Author

Brian J. O’Connor

Brian J. O’Connor

Freelance Contributor

Brian J. O’Connor is an award-winning personal finance journalist featured in The New York Times, The Wall Street Journal, MarketWatch and other outlets. He was the financial editor and columnist for The Detroit News and founding managing editor of Bankrate and a Knight-Bagehot Fellow at Columbia University.

What to Read Next

Disclaimer

The content provided on MoneyWise is information to help users become financially literate. It is neither tax nor legal advice, is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional. We make no representation or warranty of any kind, either express or implied, with respect to the data provided, the timeliness thereof, the results to be obtained by the use thereof or any other matter.