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5 Proven Ways to Boost Your Retirement Income

Selena Maranjian, The Motley Fool

If you're worried about retirement, you're not alone. A Gallup survey taken a few months ago found 54% of respondents reporting that they worry about not having enough money for retirement. Many are right to worry, too: According to the 2017 Retirement Confidence Survey, about 24% of workers said they had less than $1,000 saved for retirement, and a whopping 55% had less than $50,000. Only 20% had socked away $250,000 or more. Yikes!

Fortunately, once you've spent a little time figuring out how much money you'll need in retirement, there are many ways you can generate your needed retirement income.

"retirement income 101" written on a blackboard

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Here are some valuable ways to increase your retirement income:

1. Take advantage of retirement savings accounts

The more you contribute to tax-advantaged retirement savings accounts such as IRAs and 401(k)s, the more money you'll have in retirement. There are two main kinds of IRAs -- the Roth IRA and the traditional IRA -- and for both in 2017, the contribution limit is $5,500 for most people and $6,500 for those 50 and older. That might not seem like a lot of money, but it's quite powerful if it can grow for many years. The table below shows how much money you can accumulate with annual $5,500 contributions at different average annual rates of growth:

$5,500 Invested Annually for

Growing at 6%

Growing at 8%

Growing at 10%

15 years

$135,699

$161,284

$199,224

20 years

$214,460

$271,826

$346,514

25 years

$319,860

$434,249

$595,000

30 years

$460,909

$672,902

$995,189

Source: Calculations by author.

A 401(k) has much more generous contribution limits -- for 2017, it's $18,000 for most people and $24,000 for those 50 or older.

Roth IRAs and Roth 401(k)s (which are increasingly available) can be especially powerful retirement income generators, as they let you withdraw money in retirement tax-free!

A clock face with the words "time to retire" on it and the hands pointing to or approaching the word "retire"

Image source: Getty Images.

2. Work a little longer

You may not be eager to delay retiring, but doing so can make a huge difference in your future financial security -- giving you a bigger war chest with which to retire and fewer years for which the money will have to last. You might enjoy your employer-sponsored health insurance for a few more years, too, perhaps while collecting a few more years' worth of matching funds in your 401(k).

Here's how it can work: Imagine that you save and invest $10,000 per year for 20 years, and it grows by an annual average of 8%, growing to about $494,000. If you can keep going for another three years, still averaging 8%, you'll end up with more than $657,000! That's more than $160,000 extra just for delaying retiring for a few years. If you're somewhat close to retiring, the table below will show you how much more you might amass over several relatively brief time periods if your money grows by an annual average of 8%:

Growing at 8% for

$10,000 invested annually

$15,000 invested annually

$20,000 invested annually

3 years

$35,061

$52,592

$70,122

5 years

$63,359

$95,039

$126,719

10 years

$156,455

$234,682

$312,910

12 years

$204,953

$307,429

$409,906

15 years

$293,243

$439,864

$586,486

Source: Calculations by author.

A blue umbrella over the word "annuity"

Image source: Getty Images.

3. Consider fixed annuities

If you don't have any pension income in your future, and you wish you did, take a look at annuities. Some annuities, such as variable annuities and indexed annuities, can be quite problematic, often charging steep fees and sporting restrictive terms, but another kind of annuity -- the fixed annuity -- is well worth considering. Fixed annuities are simpler instruments, and they can start paying you immediately or on a deferred basis.

The table below will give you an idea of what kind of income various people might be able to secure in the form of an immediate fixed annuity in the current economic environment. (You'll generally be offered higher payments in times of higher prevailing interest rates.)

Person/People

Cost

Monthly Income

Annual Income Equivalent

65-year-old man

$100,000

$545

$6,540

70-year-old man

$100,000

$623

$7,476

70-year-old woman

$100,000

$586

$7,032

65-year-old couple

$200,000

$937

$11,244

70-year-old couple

$200,000

$1,029

$12,348

75-year-old couple

$200,000

$1,178

$14,136

Source: immediateannuities.com.

Annuities can provide peace of mind, removing stock market moves and the economy's current condition from your worries and simply delivering check after check for a long time, or for the rest of your life. A deferred annuity can also be smart, starting to pay you at a future point, such as when you turn a certain age. A 60-year-old man, for example, might spend $100,000 for an annuity that will start paying him $957 per month for the rest of his life beginning at age 70. That can remove any worries about running out of money late in life.

4. Think about a reverse mortgage

Another way to generate additional income in retirement is via a reverse mortgage. It's essentially a loan secured by your home. A lender will provide income (that's often tax-free) during your retirement, and the loan doesn't have to be paid back until you no longer live in your home -- perhaps because you moved into a nursing home or passed away. There are some drawbacks, though, such as requiring your heirs to sell your home unless they can afford to pay off the loan, but if you're really pinched for funds, and no one is counting on inheriting your home, getting a reverse mortgage can be a sensible move.

two red dice over a torn piece of paper on which is printed, "will your Social Security be enough?"

Image source: Getty Images.

5. Make the most of Social Security

Finally, be strategic about Social Security. You can increase or decrease your benefits by starting to collect Social Security earlier or later than your "full" retirement age (which is 66 or 67 for most of us), and you can get more out of the program by coordinating with your spouse when you each start collecting. If you and your spouse have very different earnings records, for example, you might start collecting the benefits of the spouse with the lower lifetime earnings record on time or early, while delaying starting to collect the benefits of the higher-earning spouse. That way, you both get to enjoy some income earlier, and when the higher earner hits 70, you can collect their extra-large checks. Also, should that higher-earning spouse die first, the spouse with the smaller earnings history can collect those bigger benefit checks.

There are even more ways to maximize your Social Security income -- so learn more about them and see which ones you can act on.

Don't leave your retirement to chance. By taking some time to plan and by making some strategic moves, you can enjoy more retirement income and have a more comfortable future.

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