How to Keep Your Savings Account Full During Retirement

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Savings Account

Some people tend to start saving for their retirement long before the due date. But there’s another section of people who would have nothing left in their bank accounts once they retire. How will they cope with their living expenses, then?

In old age, most people find it difficult to work especially because of their deteriorating health conditions. Hence, you become dependent on somebody. Nobody likes that. Financial freedom is must to feel free.

Thus, if you’re retired or about to retire, here are some tips that may help you keep your savings account full during your retirement years.

1. Work part-time

You may be retired because your body isn’t capable of working full-time anymore. You might get tired or prone to a number of diseases. This doesn’t mean you have to sit idle and feed on your pension.

You can indulge yourself in some part-time work in retail or in the hospitality sector. If you’re interested in art and craft, you can sell your work and earn from it. Just ensure that you save a portion of your earnings.

2. Downsize

Check your belongings. Identify what you need and what is extra. By extra, I mean, the things that you can survive without.

If you have an extra house, extra vehicle, designer clothes, or paintings – you can sell them off and earn from it. Dedicate this amount to your savings and use it for emergency funds.

3. Traditional IRA

This is an investing arena where you can save from your retirement. The major benefit of this investment scheme is that it is tax-deductible. You simply have to open an account and keep paying yourself. So, if you contribute Rs. 2000, you don’t need to pay tax on that same amount.

You can put in the money and let it grow without paying taxes for the same. This way your money will grow at a quicker rate. However, you have to pay tax on the amount you withdraw. But that tax is based on the ongoing year’s tax rate. So, you save a good amount.

 

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4. Roth IRA

This is different from the traditional IRA. Here, you don’t pay the tax at the time of withdrawal. Instead, you keep paying the tax every time you contribute to the account. This way, at the time of withdrawal, you wouldn’t owe a single penny to anybody else.  

Otherwise, you can also opt for simple IRA, traditional 401 (k) plans, or Roth 401(k) plans. They all have their own pros and cons. You can study all these plans and choose one according to your needs.

5. SEP

This is the best option for self-employed individuals to save for retirement. Any business owner with one or more staff or a freelancer, you’re eligible to open this account. This is equivalent to a traditional IRA.

This means tax is not deducted at the time of contributing the money in the savings account. You’ll have to pay the tax while withdrawing the amount from the account. In this account, you can pitch in a maximum of 25% of salary up to a limited amount.

6. Invest in stocks

Most investment enthusiasts opt for shares or mutual funds. The reason behind this is that the share prices are expected to rise after a period of time which can bring you profits. For example, if you invest in your 20s when you’re working and sell those shares in your 70s post-retirement, your money is certain to grow.

The only drawback here is that the share market fluctuates. So, if the share prices drop, you may have to suffer a loss. To avoid such risks, a few people also invest in bonds as they’re less risky and guarantee yearly income. So, they are a sure-shot way to bring you profits.

7. Increase your credit points

Try to shop from your credit card. This increases your credit card points and can get you cashback offers or different vouchers for shopping or travel. Take advantage of these offers or sign up for a new credit card to avail more benefits.

Over to you…

These are a few points that can help you keep your savings account full and relish a good living during your retirement years. Other than this, you can also maintain a budget for your expenses so that you don’t make any unnecessary spending.

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