Last week I had a face-to-face with one of my long time clients. She was recently laid off from her job of 30+ years and is earnestly looking at the idea of not returning to work and retiring early. She asked me for some real world ideas on how to live more frugally and to make her retirement dollars last longer. I thought that would be a good chance for me to share with you some of the strategies we discussed:

1.  Maximize Social Security-  One of the most powerful ways to maximize lifetime income is to collect the largest check possible from Social Security. Benefits rise with inflation, and it provides a survivors benefit for married couples, which is important when savings are limited. It is never good to assume that the best time is as soon as you are eligible, so be sure to meet with an expert on the options before you make your election
2.  Reduce the Tax Burden- Minimizing taxes can help when every dollar matters.If there is a period in your retirement where you expect to be in a lower tax bracket, it could make sense to convert dollars from your traditional IRA into a Roth. Roth withdrawals won’t count towards your tax bill and this could also help lower any potential tax implications on your social security.
3. Buy an Annuity – Giving money to an insurer in exchange for a guaranteed income can really help retirees cover the basics. The payout rates on an income annuity can be higher than bonds because it provides a source of return that investments cannot.
4. Look at a Reverse Mortgage – Reverse mortgages, most of which are backed by the Federal Government, let people over the age of 62 with substantial home equity access that equity- it does not have to be paid back until the borrower dies or moves out of the house. One approach is a “standby” reverse mortgage where a borrower can open a line of credit to be tapped when necessary. Reverse mortgages have a one time upfront fee and some other charges but for retirees who have little capital but lots of “house” equity- this can be a good plan.
5. Policy Analysis and Review –  If you own a life insurance policy now is a very good time to have it reviewed. Mortality costs have gone down over time so a thorough review is imperative. It you are healthy it may be possible to get the same insurance for less money, more insurance for the same money or even to have a “paid-up” policy.
6. Live on Less- This is the hardest part. But when we are working we tend to buy before we think since income is not a problem. Once we are on a fixed income we need to change our habits. Sometimes we have to stop ourselves and say – do we really need this or can I do without it?