Retirement Benefits That Could Save You Thousands
- Author: Russell Sawayn
- Posted: 2024-08-23
1. Tax-Deferred Retirement Savings
Tax-deferred retirement savings plans, such as 401(k)s, allow you to put part of your salary into an account exempt from taxes. It means you won't have to pay taxes on the money you save until it's withdrawn during retirement. Therefore, you'll reap all of the benefits of retirement savings, but you won't be liable for taxes on the money until later.
2. Health Care Cost Reimbursement Plans
Healthcare costs can be one of the biggest expenses associated with retirement. Many employers offer plans, which allow you to save pre-tax dollars towards health care costs during retirement. The money can help pay for prescription drugs, long-term care insurance premiums, and doctor's visits, among other noble services.
3. Social Security Benefits
Social security benefits are a great way to supplement your retirement income, especially if you haven't accumulated considerable retirement savings. The benefit depends on the amount of time you've worked and paid into Social Security and provides a guaranteed source of income once you reach retirement age. The advantage of social security is that it's not taxable, and you can collect your benefits even if you haven't reached the full retirement age.
4. Defined Benefit Pension Plan
The plan entails an employer providing a guaranteed income for life upon retirement. It's important to note that this benefit isn't as common today since many employers have shifted away from offering such plans. Nonetheless, if you're lucky enough to be covered by a defined benefit plan, make sure that you review the terms to ensure that you understand all of your rights and obligations.
5. Employer Stock Options or Shares in a Corporation
If you have employer stock options or shares in a corporation, you can benefit from them during retirement. This type of asset has the potential to provide you with a considerable amount of money during retirement, depending on the company's performance. However, the value of employer stock options or shares can be unpredictable, and you should approach it cautiously.
6. Annuity Payments from an Insurance Company
An annuity is an insurance company contract that provides a steady income stream for the remainder of your life. Annuities can be an excellent way to ensure you have enough money to cover retirement expenses. The advantage of an annuity is that you can choose when and how much money to withdraw, which gives you more control over your retirement income.
7. IRA Rollovers and Transfers
You can roll over or transfer the funds into a new IRA if you have an existing traditional IRA account. The process has several advantages, including maximizing tax-deferred growth, accessing larger contribution limits, and increasing the diversification of your retirement portfolio. Retirees and seniors should consult a financial advisor for assistance with the IRA rollover process.
8. Long-Term Care Insurance Coverage
Long-term care insurance can help provide additional protection during retirement if you become ill or disabled. The coverage can offset the costs of home health care, assisted living, and nursing home expenses. It's important to note that long-term care insurance can be expensive, so compare different policies and understand the coverage limit before purchasing.
9. Reverse Mortgage
Reverse mortgages allow seniors to access their home equity without making any repayments. The loan can effectively supplement your retirement income, especially if you have ample equity in your home and don't want to downsize. Reverse mortgages have limitations, such as high fees and other restrictions, so understand the terms and conditions before committing.
10. HSA Accounts with Tax-Free Withdrawals
Health savings accounts (HSAs) are a great way to save for healthcare expenses and retirement. You can contribute pre-tax dollars to an HSA, and make tax-free withdrawals for qualified medical expenses. It makes HSAs an excellent option for covering out-of-pocket health care costs and supplementing retirement income. Over the years, the plan has helped millions of retirees improve their retirement finances.
These retirement benefits can help you save money and secure your financial future. Tax-deferred retirement accounts, such as 401(k) s and IRAs, allow you to defer taxes on the money you put in until withdrawal, saving thousands in taxes over time. Employer matching contributions to a 401(k) plan can add to your retirement nest egg, and long-term care insurance can help protect you from the financial burden of medical expenses. You only need to decide which benefits are right for you.
