7 Simple Tips to Increase Retirement Income Without Extra Work or Saving More

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"Whether you're 45 and have 40 years of retirement to live through, or you're 65 and have roughly 20 years of a retirement time horizon, deciding on how you can take money out of your portfolio is going to really impact how much it can generate in monthly or annual income."

What if you could boost your retirement cash flow without taking on another job or putting more aside for savings?

Listen in as our host Danny Gudorf shares seven powerful steps to significantly increase your monthly payments and protect your money for the long-term, from strategically delaying your Social Security and retirement year, to timing portfolio withdrawals for maximum returns, to utilizing the power of a tax professional and reverse mortgages.

Danny offers a glimpse into Gudorf Financial Group’s unique guardrails strategy, designed to help you navigate the complexities of retirement while preserving your hard-earned wealth with confidence. He sheds light on the keys to adjusting your spending based on portfolio performance in order to mitigate risks and ensure a secure financial future.

Key Topics:

  • Delaying your Social Security (1:28)
  • How to Take Withdrawals Out of Your Portfolio (2:47)
  • Take Advantage of Free Money from Your Employer (6:04)
  • Hiring a Tax Professional (7:34)
  • Why Wait an Additional Year Before Retiring? (9:07)
  • Downsizing your Home (10:43)
  • Reverse Mortgages (12:26)

Retirement is a significant milestone that many of us look forward to. However, the question that often looms large is: "Will I have enough income to enjoy the lifestyle I desire?" If you're approaching retirement or have already taken the leap, you might be wondering how to increase your income without taking on another job or saving more.

In this article, we'll explore seven effective strategies to boost your retirement cashflow and help you enjoy the lifestyle you deserve. These methods, shared by financial planning expert Danny Goodorf, owner of Goodorf Financial Group, can potentially increase your retirement income by at least 15% without requiring extra effort or savings on your part.

Key Takeaways

Before we dive into the details, here's a quick overview of the seven strategies we'll be discussing:

  1. Maximize your Social Security benefits
  2. Optimize your income withdrawals
  3. Take full advantage of employer benefits
  4. Engage in smart tax planning
  5. Consider working one more year
  6. Explore downsizing options
  7. Evaluate the potential of a reverse mortgage

Each of these strategies has the potential to significantly impact your retirement income. Let's explore them in detail.

1. Maximizing Your Social Security Benefits

Social Security is often described as the closest thing to a "free lunch" in retirement planning. While it's not entirely free (you've paid into the system throughout your working years), it's a guaranteed source of income that can be optimized with careful planning.

The Power of Delay

One of the most impactful decisions you can make regarding Social Security is when to start claiming your benefits. Many people rush to claim as soon as they're eligible at age 62, but this strategy often leaves money on the table.

Here's why:

  • For each year you delay claiming benefits past age 62, your monthly payment increases by approximately 6-8% plus inflation.
  • Once you reach full retirement age (between 66 and 67 for most people), the increase jumps to 8% plus inflation for each year you delay, up until age 70.

Let's look at an example:

Sarah's full retirement age is 67, and her full benefit amount is $2,000 per month. If she claims at 62, she'll receive only $1,400 per month. However, if she waits until 70, her benefit will grow to $2,480 per month. That's a 77% increase!

Making an Informed Decision

While delaying benefits can be advantageous, it's not the right choice for everyone. Consider factors such as:

  • Your health and family history of longevity
  • Your other sources of retirement income
  • Your retirement lifestyle plans

For many retirees, the decision of when to claim Social Security can have a six-figure impact on their lifetime benefits. It's crucial to get this right, and consulting with a financial advisor can help you make the best decision for your unique situation.

2. Optimizing Your Income Withdrawals

Once you've retired, how you withdraw money from your investment portfolio can significantly impact how long your savings last and how much income you can generate.

Beyond the 4% Rule

You may have heard of the "4% rule," which suggests withdrawing 4% of your portfolio in the first year of retirement and adjusting that amount for inflation each subsequent year. While this rule of thumb can be a good starting point, blindly following it may not be optimal for everyone.

The Retirement Income Guardrails Strategy

At Goodorf Financial Group, we use a more dynamic approach called the "retirement income guardrails" strategy. Here's how it works:

  1. We assess your likely retirement time horizon and changing income needs throughout retirement.
  2. We determine an initial income level that your portfolio can support.
  3. We establish "guardrails" around your portfolio balance.
  4. If your portfolio performs well, you can increase your spending.
  5. If returns are poor, especially in the early years of retirement, you can reduce spending to let the portfolio recover.

This strategy helps mitigate sequence of return risk (the risk of experiencing poor investment returns in the early years of retirement) while allowing for spending increases when possible.

For example, John and Mary start retirement with a $1 million portfolio. Using the guardrails strategy, they begin with a 5% withdrawal rate ($50,000 per year). They set an upper guardrail of $1.2 million and a lower guardrail of $800,000. If their portfolio grows to $1.2 million, they can increase their spending. If it drops to $800,000, they'll need to reduce spending temporarily.

The Importance of Personalization

Your optimal withdrawal rate depends on various factors, including:

  • Your retirement time horizon
  • Your risk tolerance
  • Your other sources of income
  • Your desired lifestyle in retirement

Working with a financial planner can help you navigate this complex decision and potentially increase your sustainable retirement income.

3. Taking Advantage of Employer Benefits

It's surprising how many people leave free money on the table by not fully utilizing their employer's retirement benefits. In fact, 77% of people who qualify for a 401(k) don't contribute to one at all.

Maximizing Your 401(k) Match

If your employer offers a 401(k) match, it's crucial to contribute at least enough to get the full match. Here's why:

  • It's essentially free money
  • It can significantly boost your retirement savings without requiring additional out-of-pocket contributions

Let's say your employer offers a 50% match on the first 6% of your salary that you contribute. If you earn $50,000 a year and contribute 6% ($3,000), your employer will add another $1,500 to your account. That's a 50% instant return on your investment!

Beyond the Match

Even if your employer doesn't offer a match, contributing to a 401(k) can still be beneficial:

  • It provides forced savings through automatic payroll deductions
  • Contributions are typically made with pre-tax dollars, reducing your current tax bill
  • Your investments grow tax-deferred until withdrawal

If you're not currently investing in your 401(k), start as soon as possible. If you are investing but not maximizing your contributions, consider increasing them to take full advantage of this powerful retirement savings tool.

4. Engaging in Smart Tax Planning

For most retirees, taxes will be their largest expense in retirement. Yet, many people either do their taxes themselves or only engage with a tax professional for annual tax return preparation. This approach can leave significant money on the table.

The Value of Proactive Tax Planning

Working with a tax professional who specializes in future tax planning can help you:

  • Minimize your tax liability over the long term
  • Navigate complex tax situations that arise in retirement
  • Make informed decisions about various financial strategies

Key Areas for Tax Planning in Retirement

  1. Roth Conversions: Converting traditional IRA funds to a Roth IRA can provide tax-free income in retirement. A tax professional can help you determine the optimal amount to convert each year to minimize your overall tax liability.

  2. Social Security Taxation: Up to 85% of your Social Security benefits may be taxable, depending on your other income. Smart planning can help reduce the tax impact.

  3. Required Minimum Distributions (RMDs): Once you reach age 72, you're required to take distributions from most retirement accounts. A tax professional can help you plan for these distributions to minimize their tax impact.

  4. Capital Gains Strategies: If you're planning to sell investments or downsize your home, a tax professional can help you strategize to minimize capital gains taxes.

For instance, Jack and Diane are considering downsizing their home. Their tax planner helps them realize that by waiting until next year when their income will be lower, they can save $10,000 in capital gains taxes on the sale of their home.

Remember, retiring is a significant taxable event. Being proactive in your tax planning can save you thousands of dollars over the course of your retirement.

5. Working One More Year

While it might not be the most exciting strategy, working just one more year before retiring can have a substantial impact on your retirement income. Here's why:

The Mathematical Advantage

Let's say you're 63 years old and planning to retire. The average life expectancy at this age is about 83, giving you a 20-year retirement horizon. If you retire now, you'll need to spread your savings over those 20 years.

However, if you work one more year:

  1. You'll have one less year of retirement to fund (19 years instead of 20)
  2. You'll have an extra year of savings and investment growth
  3. Your Social Security benefit will continue to grow

This combination of factors can increase your annual retirement income by about 5% or more.

Beyond the Numbers

Working an extra year can provide benefits beyond just financial ones:

  • It gives you more time to prepare emotionally for retirement
  • It allows you to build stronger professional relationships that could lead to part-time or consulting opportunities in retirement
  • It provides an opportunity to mentor younger colleagues and leave a lasting impact on your workplace

Consider Sarah, who was planning to retire at 64. By working one more year, she increased her 401(k) balance by $50,000, allowed her Social Security benefit to grow by 8%, and realized she enjoyed mentoring younger colleagues so much that she negotiated a part-time consulting role for her first few years of retirement.

While everyone's situation is unique, carefully considering the option of working just one more year could significantly boost your retirement income and satisfaction.

6. Exploring Downsizing Options

Downsizing your home can have a tremendous impact on both your quality of life and your spendable cashflow in retirement. Here's how:

Financial Benefits of Downsizing

  1. Lower Expenses: A smaller home typically means lower property taxes, insurance costs, and utility bills.
  2. Reduced Maintenance: Less square footage usually translates to less time and money spent on upkeep.
  3. Potential Capital Gains: If you've built up significant equity in your home, downsizing can free up capital to invest or use for other purposes.

Example Scenario

John and Mary own a 3,000 sq ft home valued at $400,000. They downsize to a 1,500 sq ft condo worth $250,000. This move reduces their property taxes by $2,000 per year, cuts their utility bills in half (saving another $1,500 annually), and frees up $150,000 in home equity. Invested conservatively, this equity could generate an additional $6,000 in annual income.

Alternative Options

If moving isn't appealing or feasible, consider these alternatives:

  1. Rent Out a Portion: If you have extra space, consider renting out a room or converting part of your home into a separate rental unit.
  2. Airbnb: If you travel frequently or have a second home, short-term rentals could provide additional income.
  3. Home Equity: Your home can be a valuable asset for funding long-term care needs later in life.

Remember, your home is not just a financial asset—it's where you live. Any decision to downsize should consider both financial and lifestyle factors.

7. Evaluating the Potential of a Reverse Mortgage

A reverse mortgage can be a way to access the equity in your home without selling it. However, it's a complex financial product that should be approached with caution.

How Reverse Mortgages Work

A reverse mortgage allows homeowners aged 62 or older to borrow against their home equity. Unlike a traditional mortgage:

  • You don't make monthly payments to the lender
  • The loan doesn't have to be repaid until you move out, sell the home, or pass away
  • You retain ownership of your home

Potential Benefits

  1. Supplemental Income: A reverse mortgage can provide additional monthly income or a lump sum payment.
  2. No Monthly Payments: As long as you live in the home and meet the loan obligations, you don't need to make monthly mortgage payments.
  3. Non-Recourse Loan: You (or your heirs) will never owe more than the value of your home when the loan becomes due.

Important Considerations

While a reverse mortgage can provide additional income, it's crucial to understand the potential drawbacks:

  1. Fees and Interest: Reverse mortgages often have high upfront costs and interest rates.
  2. Reduced Inheritance: It will reduce the equity in your home, potentially leaving less for your heirs.
  3. Loan Obligations: You must continue to pay property taxes, insurance, and maintain the home.

For example, Martha, age 75, owns a $300,000 home outright. A reverse mortgage could provide her with a lump sum or line of credit of about $150,000, or monthly payments of about $800. However, she needs to carefully consider if this is the best way to access her home equity given her long-term goals and family situation.

When to Consider a Reverse Mortgage

A reverse mortgage might be worth considering if:

  • You plan to stay in your home long-term
  • You need additional income and have limited options
  • You understand and are comfortable with the terms and costs

As with any major financial decision, it's crucial to consult with a financial advisor who can help you understand if a reverse mortgage is appropriate for your situation.

Conclusion

Boosting your retirement income doesn't always require drastic measures like returning to work or dramatically cutting your expenses. By implementing these seven strategies—maximizing Social Security, optimizing withdrawals, leveraging employer benefits, smart tax planning, considering working an extra year, exploring downsizing options, and carefully evaluating reverse mortgages—you can potentially increase your retirement income by 15% or more.

Remember, retirement planning is not a one-size-fits-all endeavor. Each of these strategies should be evaluated in the context of your unique financial situation, goals, and values. Working with a qualified financial advisor can help you navigate these complex decisions and create a retirement income plan tailored to your needs.

Your retirement years should be a time of enjoyment and fulfillment. By making informed decisions about your finances, you can create the cash flow you need to support the retirement lifestyle you've always dreamed of. Start implementing these strategies today, and take control of your financial future!

*This blog post is based on the insights shared by Gudorf Financial Group. For personalized advice tailored to your unique circumstances, always consult a financial, legal, or tax professional.*

Transcript: Prefer to Read — Click to Open

Danny (00:05.454)

Welcome to the Limitless Retirement Podcast. My name is Danny Gudorf, the owner of Gudorf Financial Group. Whether retirement is on your horizon or you’ve already made the leap, this podcast tackles your most important questions in retirement. Every episode, I’m here to share valuable tips and strategies to help you succeed in retirement. So let’s go ahead and get started with today’s show.

Are you approaching retirement and looking for ways to increase your income without taking on another job or saving more? If so, this video is for you. I’ll share seven effective strategies to boost your retirement cashflow and enjoy the lifestyle you deserve. Hey everyone, my name is Danny Goodorf and I’m a financial planner and owner of Goodorf Financial Group. By watching this video, you’ll learn how to maximize your social security benefits

optimize your income withdrawals, take advantage of your employer benefits, and make smart tax and spending decisions. These strategies can help you increase your retirement income by at least 15 % without any extra effort or any extra savings on your part. First, let’s talk about Social Security. While there’s no such thing as a free lunch, Social Security comes pretty close. Most viewers of this channel

are likely aware that delaying your social security benefits can significantly increase your monthly payments. For each year you wait past age 62, your social security payment increases by approximately six to eight percent plus inflation. Once you reach full retirement age, which for most of you falls between 66 and 67, the increase jumps to eight percent plus inflation.

all the way up until age 70. This fact is incredibly important because many people don’t retire at age 62. Yet, the majority of social security recipients opt to start taking benefits at this age. By understanding how the social security tables work and considering your future lifestyle, you can make a well -informed decision on when to start claiming

Danny (02:33.762)

this valuable source of retirement income. For many of our clients, this is a couple hundred thousand dollar decision. So it’s very important to get this right. The second strategy that we’re gonna talk about that can significantly change your retirement income is gonna be how you take withdrawals out of your portfolio. Now there’s a lot of different strategies out there on what’s the best practice to begin taking

your portfolio withdrawals and what number that needs to be. One of the more common ones that exists is the 4 % rule. But by blindly following some of these common rules and not applying them to your specific situation, you can leave a lot of money on the table. Whether you’re 45 and have 40 years of retirement to live through or you’re 65,

and only have roughly 20 years of a retirement time horizon to live through, deciding on how you can take money out of your portfolio is going to really impact how much it can generate in monthly or annual income. The 4 % rule says that you can take 4 % of your portfolio value out starting and in just that every year for inflation. At our firm, we use a strategy called retirement income guardrails.

with our clients. A guardrail strategy is going to look at your likely retirement time horizon and changing income needs in your retirement years and determine an initial income level that the portfolio can support. Then you place guardrails around your portfolio balance, which tell you when you can increase your spending or when you need to cut it back. If your portfolio returns are good, you can bump up your spending

and lessen the chance you’ll leave too much money on the table. But if your returns are bad in those initial retirement years, then you can reduce your spending a little bit. This will allow us to reduce that sequence of return risk in the event that markets are falling and going down. It will allow you to cut your spending to let the portfolio recover

Danny (04:57.324)

before then eventually increasing spending again. To determine the optimal withdrawal rate for your unique situation, it’s highly recommended that you consult with a financial planner or financial advisor. They can help you navigate this complex interplay between Social Security and taking investment income withdrawals out of your portfolio. Getting this calculation right means

you’ll be able to spend more money in retirement because you’ve done the necessary work and arrived at an accurate mathematical conclusion. Interestingly, many viewers of this channel actually spend less than their model suggests they could, often due to concerns about running out of money. I frequently see comments from people who feel unable to spend as much as their financial plan allows, not because they lack

ways to use the money, but because they’re apprehensive about the future. So this is a very important decision to make. The next way to boost your retirement income is to take advantage of the free money from your employer. Believe it or not, 77 % of people who qualify for a 401k don’t contribute to one. And many of those individuals are missing out

on the valuable company matching contributions simply because they’re not putting money in on their 401k plans and not putting in the minimum amount required to maximize the match. Now, you might be thinking, Danny, didn’t you say at the beginning you were gonna show us how to increase our retirement income without boosting savings? This sounds like you’re telling us to save more.

Let me clarify a little bit. If you’re not investing in your company’s 401k and one is available to you, there’s a good chance you’re not investing at all. In that case, you absolutely need to start contributing to your 401k as soon as possible. However, if you are investing but not utilizing your 401k, you might have your investment sequence wrong, particularly if your employer

Danny (07:20.522)

offers a match. Even without a match, the pre -tax, forced savings aspect of a 401k is a compelling reason to participate in it. Next strategy item that I want to talk to you about is to consider hiring a tax professional, such as a tax accountant or tax planner. To have someone to help you plan around your taxes for the future, not just prepare

your annual tax return, but your overall tax planning. For most people, taxes are going to be their largest expense in retirement. Many choose to either do their taxes on their own, and very few engage in proactive tax planning for the present and future. Tax professionals don’t just help you find current year tax rates, they assist you in planning for future life events.

But it’s very important that you have someone that is familiar and participates in that future tax planning. Most CPAs and tax professionals are so busy that it’s hard for them to do any type of real tax planning with their clients. Tax planning is crucial for various scenarios, such as downsizing your house without paying capital gains taxes, executing a Roth conversion, or distinguishing

between personal and business expenses to maximize your available tax deductions today. Retiring from a job and starting retirement is a significant taxable event. So be proactive in your planning. It’s essential. The next way to boost your retirement income by at least 5 % in most cases is to wait one more year before retiring. Here’s a simple fact.

Well, none of us know for sure how many days we have left. One year from today, we will have 365 fewer days. Why is this important? Well, if you’re 63 years old and the average lifespan at that age is approximately 83, giving you another 20 years, and it’s slightly less for males and slightly more for females, if you spread

Danny (09:47.95)

your hard earned investments over the next 20 years, you’ll receive roughly 5 % per year on those assets. But if you wait just one more year, instead of dividing everything by 20, you’ll be dividing it by 19. That extra year translates to an additional 5 % of annual income. In addition to that, it will allow

your Social Security benefits to continue to increase and increase that benefit amount. And it will also allow you for your portfolio to continue to grow because you no longer need to take withdrawals in that year. You’re postponing them for one year. So all of those three things make potentially waiting to retire one more year that much of a better solution. Next, let’s discuss

downsizing your home. If done correctly, downsizing can have a tremendous impact on your quality of life and your spendable cashflow in retirement. First, let’s clarify what I mean by downsizing. It involves either selling your current home if you own it or leaving it if you’re renting and moving into a less expensive residence. This results in lower taxes

lower utility bills, and an overall lower cost of living. With lower expenses, you’ll have more free cash flow. It’s a simple equation of money in versus money out. If you’re selling your home, you’ll have more equity to then invest or allocate to other areas of your life. If downsizing isn’t an option, consider other options like renting out part of your house,

or potentially renting it on Airbnb if you have multiple homes or multiple areas that you’re living in. You’re paying for that space, but not getting any benefit out of it if it’s sitting empty. In addition, your home can be an important asset when it comes to paying for long -term care. For those of you who don’t have a mortgage and have a lot of equity in your home,

Danny (12:12.414)

One thing you can do is at the end of life, as you’re moving on to get long -term care, you can sell that home to help pay for long -term care. So the last item I want to talk to you about today is a reverse mortgage. To be completely honest, I’m not a huge fan of reverse mortgages, but they do have a certain place in certain situations. However, I recommend proceeding with caution

and fully understanding what you’re getting into before making a decision. For most people, the only way to truly access the value of their home is to sell it. But if you’re not ready to sell, you do have an asset with value, but you may plan on living in that home for the rest of your life, or at least the foreseeable future. In reality, this often means

that the people who ultimately realize the value of your home won’t be you, but your heirs or your children. A reverse mortgage allows you to access the value of your home today instead of your heirs accessing it at some point in the future. Here’s why I’m not a fan though. But if you can get your mind around it, a reverse mortgage might be right for you. For most people,

their home equity is their single largest asset. It serves as a firewall between where they are today and the possibility of something really bad happening to them in the future. If you degrade that firewall prematurely, you may end up with nothing at the most critical point in your life when you need it the most. If you do decide to access your home’s value through reverse mortgage,

First, consult with a professional who has your best interests at heart, such as a financial planner or other financial planning professional. Additionally, push the decision as far into the future as you possibly can. These seven strategies can help you increase your retirement income without taking on another job or saving more. By making smart decisions about your Social Security,

Danny (14:35.758)

your portfolio withdrawals, employee benefits, and taxes, you can enjoy the retirement lifestyle you’ve always dreamed of. Thanks for tuning in. I look forward to talking with you again. And if you want to learn how Goodor Financial Group can help you experience a limitless retirement, then go to goodorfinancial .com forward slash get started. This is where you can schedule a 20 minute call

to see how our firm can help you prepare for our free retirement assessment program. This is the way we help new potential clients experience what it’s like to work with Goodor Financial Group. Thank you and have a great day. Thank you for listening to another episode of the Limitless Retirement Podcast. If you want to see how Goodor Financial Group can help you get the most out of your money, go to

goudorffinancial .com forward slash get started. This is where you can schedule a 20 minute call to see how our firm can help prepare a free retirement assessment. Please remember, nothing we discuss on this podcast is intended to serve as advice. You should always consult a financial, legal or tax professional that is familiar

with your unique circumstances before making any financial decisions.

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