Many Americans start planning for retirement as soon as they enter the workforce. You spend decades accruing investments and assets to see you through your golden age, and then you retire comfortably. But what if you need a little more money to live on? The cost of living has skyrocketed since the 1960’s. Economic turbulence has also had a serious impact on people’s retirement savings. Maybe you need more money to make ends meet with your bills. Maybe you’d just like to save some cash in a rainy-day jar so you can take a nice vacation. Regardless of your reasons, these are some solid ways to increase your cash during retirement.
Sell Your Life Insurance Policy
If you’re looking for some extra spending money for your retirement, you might consider selling your life insurance policy. Life insurance can’t benefit you while you’re still alive, and your beneficiaries might not need the payout as much as they once did. But if you sell the policy, you can get a lump sum of spending money. Policies can be sold through a life settlement. This will allow a company to be responsible for your policy and to reap the benefits after you pass away. They’ll take care of your premium payments and give you money for the policy that you can use right away.
Because the policies only benefit the company after you pass on, you usually have to be at least 65 to sell. If you’re significantly younger, you’ll be looking at a lower payout. You might be concerned about how that money would affect your taxation and retirement benefits. This guide has information with everything you should know about life settlement taxation, including how it can affect your retirement.
The Bucket Strategy
The bucket strategy is one that’s commonly touted by investment experts. With this system, you’ll put your savings into three buckets. Each bucket is based on how soon you need the money. Your first bucket encompasses your emergency money and the money you need to spend on your living expenses. Use a high yield savings account so you can easily access this cash when you need it.
Your second bucket is for money you’ll be spending in three to ten years. You don’t need immediate access to this, but it does need to be there later. So, you can invest in safe bonds to grow the assets without risking them. The last bucket is all the money you plan to spend more than a decade from now. You can put this into higher risk, high reward ventures. That way, when the time comes, your assets have grown without you losing your money.
Consider Systematic Withdrawals
Systematic withdrawals involve taking out part of your retirement savings each year, and then living on that money for the year. You could take out roughly 4 percent of your existing nest egg every year. Then you can have the rest tied up in investments. As the assets grow over time, you’ll have enough to get through decades of retirement.