"Good things come to those who wait."
You've undoubtedly heard that adage many times. It's often true. And the old saying definitely applies to anyone contemplating early retirement. Waiting to claim Social Security until your full retirement age (or even better, until age 70) will increase your retirement benefits.
But what if you don't want to wait? Here are three ways to boost your retirement income without holding off on claiming Social Security.
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1. Maximize your investment income
One of the best alternatives to boost your retirement income is to maximize how much income you receive from investments. In other words, make your money work harder for you.
Talk to your financial advisor about potential steps you can take to reduce the taxes you pay on your investment income. For example, you might be able to shift some funds into tax-advantaged retirement accounts such as Roth IRAs.
Consider investing in assets that provide more income. Some stocks pay significantly higher dividend yields than others. Real estate investment trusts (REITs) could be a good option since they must return at least 90% of income to shareholders as dividends to be exempt from income taxes. If you'd prefer to own a basket of stocks, check out closed-end funds (CEFs). These funds trade in the same way as a stock and typically offer juicy yields.
Again, discuss any investment decisions with your financial advisor. However, many retirees could be able to increase their investment income relatively easily.
2. Work part-time
Another way for many retirees to increase their income is to work part-time. With unemployment rates remaining relatively low, you might find it easier than you think to find a part-time job.
Keep in mind that if you make too much money it could impact your Social Security benefits. Social Security will deduct $1 from your retirement benefits for every $2 you earn above $23,400 if you're under your full retirement age for the entire year. During the year you reach your full retirement age, $1 will be deducted for every $3 earned above $62,160. These earnings limits are likely to change in the future as they have in the past.
The good news, though, is that returning to work won't cause you to permanently forfeit any Social Security benefits. Once you reach your full retirement age, Social Security will recalculate your benefit amount to return any money previously deducted. Also, your benefits will no longer be reduced regardless of how much you earn beginning in the month you reach your full retirement age.
By the way, it's possible that working after claiming Social Security could increase your retirement benefits. Social Security bases its benefit calculation on the 35 years where you earned the most. If you earn more in a job while receiving Social Security retirement benefits than you did earlier in your career, Social Security will adjust your benefit to your advantage.
3. Move
Our third way to boost your retirement income without holding off on claiming Social Security is to move. There are two approaches to consider.
First, many retirees elect to downsize. If you're still paying for your home, moving to a smaller house or apartment could reduce your expenses. If you've paid off your home, downsizing could at least lower your utility bills and property taxes.
Second, think about moving to a state where retirement income isn't taxed. Forty-one states don't tax Social Security benefits. Thirteen states don't tax Social Security, 401(k) withdrawals, IRA withdrawals, or pension income.
Granted, moving won't technically increase the amount of money you receive. However, it could translate to greater disposable income during your retirement years.
