5 retirement sources you probably haven’t thought about yet

Financial Planners


Financial planners typically recommend that retirees get back about 70% to 80% of their pre-retirement income. However, with the approaching retirement date and where that money is coming from, the proposal may be nerve-wracking.

In most cases, you plan to finance your retirement with a combination of Social Security and withdrawals from a retirement account such as a 401(k) or an individual retirement account (IRA). But what if these funding sources are still scarce?

Here are five sources of retirement income you may not have considered.

A couple walking hand in hand on the beach.

Image Source: Getty Images.

1. Reverse Mortgage

If you outright own your home or have a sizeable stake, a reverse mortgage is one option. It’s basically a reverse loan that the bank pays you. As long as you can keep up with property taxes and other housing-related expenses, you can stay home. Interest accrues monthly, but the loan never comes due until you die, sell your home, or move permanently.

A reverse mortgage is probably not a good idea if it is determined that the home will remain in the family because your heirs will have to pay off the rest when you die. I mean But if you’re a homeowner who needs extra cash after retirement, a reverse mortgage is worth considering.

2. Life insurance policy

In whole life insurance, such as whole life insurance, the policy includes both the death benefit and the cash value that accumulates over time. You can withdraw the cash value tax-free in most cases, as long as you don’t exceed the amount you paid, but the value of the death benefit will be reduced. But if your children are grown up and no one is financially dependent on you, tapping your life insurance policy may make sense.

3. HSA funds

Unspent money in your Health Savings Account (HSA) will stay with you when you change jobs. If he receives distributions for non-medical purposes before the age of 65, he will be subject to a 20% fine on top of his income tax. However, once you turn 65, you can withdraw money without penalty, but the withdrawal is subject to income tax.

Perhaps the smartest way to use your HSA is to use the money to pay for health care in retirement. Fidelity estimated that in 2022, the average 65-year-old couple can expect to pay her $315,000 in out-of-pocket medical expenses in retirement. If you keep HSA funds and use them for health care in retirement, you can use the money for Medicare premiums, copayments, and other outstanding expenses without paying taxes or penalties.

4. Pension

An annuity is insurance that protects you against the risk that your money will live longer. Temporarily deposit large amounts of cash in exchange for guaranteed lifetime income.

These contracts are often unpopular because they are very complicated and expensive. However, in some cases, especially if you are in good health and have a family history of longevity, an annuity may be worth considering. For those who are relatively risk averse and prefer a guaranteed stable income over investments with high growth potential, these make the most sense.

5. Part-time job

The idea of ​​working after retirement may seem contradictory. But his 2022 survey from the Transamerica Retirement Research Center found that 57% of his workers plan to work part-time or full-time after retirement.

Many older Americans are unable to work for a variety of reasons, including health problems and caregiving duties. But if you can get some work done, either through a part-time job or a side job like driving a rideshare or renting an extra room in your house, the extra income could help limit withdrawals from your retirement account. I have. It also helps delay Social Security. With the proliferation of remote work opportunities, there may be plenty of options that fit the lifestyle you envision for retirement.



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