3 Smart Ways to Stretch Your Retirement Savings
Try these strategies to make your nest egg grow faster and last longer.
When retirement starts to come into view and the number of years to build your nest egg is dwindling, you need new strategies to supercharge your savings.
We've got some levers you can pull to boost the chances that your pot of hard-earned money will last throughout your retirement.
Make Catch-Up Contributions
First, the bedrock of retirement planning is to save as much as you can, so make use of catch-up contributions if you're eligible. Starting in the year you turn 50, the IRS lets you put even more away for retirement -- an extra $5,500 per year for a 401(k), and an extra $1,000 for an IRA. In 2015, the catch-up contribution for 401(k)s climbs to $6,000.
Claim Social Security Strategically
Second, be strategic about when to claim Social Security. Waiting to claim until you reach full retirement age -- which ranges from 66 to 67, depending on the year you were born -- gives you 100% of your benefit. If you claim Social Security before you reach your full retirement age, your benefits will be reduced. If you can wait past full retirement age to take benefits, you can get even more money. You'll earn 8% a year in delayed-retirement credits for each year you wait, up to age 70.
Factor In Taxes on Retirees
Finally, start planning now about where you're going to retire, because there are big differences in how states tax retirement savings. Some of the most generous exclude all retirement income from state tax; others exempt a certain amount that could run into the thousands of dollars or just a couple of hundred. The sources of your retirement income can matter, too. Some states will exempt private pensions, while others exempt public pensions. Some will exempt distributions from retirement accounts, such as 401(k)s and IRAs, and many exempt Social Security. Check out our retiree tax map to learn about your state -- or a state where you'll fare better.
Need additional ideas? Take a look at even more savvy moves you can make to stretch your retirement savings.