Ways to Build Wealth in Retirement

You’ve worked hard your whole life and prioritized saving in a retirement account. Now, you are retired, and it is time to relax and enjoy a stress-free lifestyle! In order to continue to live a comfortable and fun life after your career is over, it is important to have the funds to be able to do so. Just because you retired from your job does not mean you should stop building wealth. There are several ways to build wealth in retirement, including continuing to invest, purchasing a life insurance policy, starting a new and less demanding career, and reducing your expenses. Read on to learn more about how to build wealth in retirement.

Investing During Retirement

One key way to build wealth during retirement is to continue to invest. Investing seems scary to many people, especially when they have stopped bringing in an income, but it is essential to building wealth. Savings accounts have an average annual interest rate of 0.09%, which is less than the rate of inflation. In comparison, the average stock market return over the course of ten years is 9.2%. If investing wisely, you should find your money building on itself at a higher rate than it would in a savings account. There are several things to keep in mind when investing during retirement: 

• Have a plan and stick to it: As we have all seen from the COVID-19 pandemic, the stock market can dip. It can be scary when you are not bringing in income at the same rate as before, but plans are created to withstand such turbulent times. However, in order for that to work, it is essential that you stick to your plan and do not liquidate your investments at the first sign of trouble.
• Start investing as soon as possible: If you are already investing, continuing to do so is vital. If you aren’t, it’s never too late to start investing. The sooner you do, the more wealth you will likely build in the long run. Taking advantage of compound interest can benefit you in the long run and help you build more wealth.
• Pay attention to investment fees and taxes: You can minimize investment fees by using passive investment options in efficient asset classes and mitigate taxes by keeping your less tax-efficient investments, like corporate bonds, in tax-exempt accounts.
• Diversify your investment portfolio: Diversification can help to reduce your overall investment risk while increasing the potential for return. Mutual funds, index funds, and exchange-traded funds (ETFs) are all options to diversify your investment portfolio without having to manage individual securities. 

By keeping the above tips in mind, you’ll find that investing during retirement will be a great help in building wealth after your career has ended.

Using Life Insurance to Build Wealth in Retirement 

Many retired individuals assume it is too late for them to purchase a life insurance policy, but this is not the case. With underwriting, many seniors are qualified to purchase life insurance. There are options for simple and advanced underwriting. Simple underwriting is easier to obtain, but for consumers who feel like they are in great health, advanced underwriting can help them achieve a more cost-effective premium. 

There are a few ways to build wealth in retirement using a life insurance policy. The first involves passing that wealth down to beneficiaries after you pass away. Another option is to take out a policy on someone else, such as your parents, and make yourself the beneficiary. Then, when that person passes away, you will receive the money from the policy income tax-free. This method requires the permission of the insured person, showing that you would be impacted financially if the person passed away and meeting several other requirements.

Another option is to take out a loan against the accumulation of cash from an insurance policy. Permanent insurance policies have a forced savings mechanism that accumulates cash called cash value. You can take out a loan against the cash value to use for retirement expenses.

How to Earn Money in Retirement 

Not every career has to be stressful and demanding. Starting a new job after retiring can help you earn extra cash without the pressures of your previous career. Working part-time is a great way to free up a ton of your time in comparison to the number of hours you worked at your former full-time job while still bringing home an income. 

A great way to earn money in retirement is to do something that is a hobby of yours. For example, if you are a pet lover, working part-time as a dog walker and pet sitter could be an enjoyable way to spend your retirement and earn some extra income. If you are a sports lover, look for a young team to coach in your spare time. Whatever your hobbies may be, finding a related part-time job is a great way to bring in some extra cash each month.  

How to Reduce Your Expenses During Retirement

It’s essential to control your spending in retirement because you are not bringing in as much income each month as you were when you had a full-time job. Keeping track of where you spend your money and setting a spending plan for yourself are great ways to reduce your spending. Although it is important to have fun in retirement, it is possible to have fun and cut some costs at the same time. A few ways that you can reduce your expenses in retirement include:

• Downsizing: If you lived in a big house with children during your working years, downsizing is a great option for reducing your expenses. If your children are grown and moved out of the house, you don’t need to have all of those extra bedrooms and living space anymore. 
• Taking advantage of senior discounts: There are tons of deals out there that can help seniors reduce their expenses. You can find senior discounts at restaurants, hotels, retail stores, and more. Don’t be afraid to take advantage of these opportunities.
• Traveling during the off-season: Now that you are retired and have much more free time, you don’t need to travel in the summer months when it is more expensive. By traveling during the off-season, you can save money on accommodations and plane tickets.
• Cooking more meals at home: Since you will find yourself having more free time in retirement, cooking meals at home won’t seem as daunting. This will help you save money on eating out, and you might even pick up a newfound hobby.

Contact HSC Wealth Advisors for Help With Retirement Planning and Investing

If you’re looking for more information about how to build wealth in retirement, our financial advisors here at HSC Wealth Advisors know the ins and outs of retirement planning and investing. We are here to help you build wealth in retirement so you can lead the relaxing life you deserve after many years of working hard in your career. Contact us today to speak to an advisor!