Supplement Your Retirement Outside Retirement Savings Accounts – Five great ideas
In addition to Social Security, retirement accounts are a primary resourse for income when you retire. But these aren’t the only tax advantaged tools available to you. Here are five other great ideas to supplement your retirement income.
The tax code is very specific in helping you save for retirement through use of IRA’s, 401(k)’s, 403(b)’s, and benefit accounts. However, there are other tax savings to be had if you know where to look. Here are some tax-advantaged ways to earn more during your retirement.
- Rent your home. You can rent your home for up to 14 days each year tax-free. For example, with proper planning you can arrange to rent out your home while you are away having fun or visiting grandchildren.
- Maximize your earnings. Each year you can earn some income and still stay below your taxable income threshold. Be careful here, as you may inadvertently make some of your Social Security Benefit taxable. You will also need to account for any minimum required retirement account distributions.
- Leverage your Roth distributions. Roth IRA’s and Roth 401(k) distributions are not taxable as long as you abide by the account rules. Consider this in your planning to reduce distributions from taxable retirement accounts.
- Use volunteerism instead of taxable income. If you plan to travel in retirement consider ways to volunteer at desired destinations in lieu of paying for food or lodging. Many national parks and other vacation destinations look for retirees to help manage campgrounds and scenic places. The free lodging and other benefits can save hard earned income that has already been taxed.
- Consider moving. With the wide array of state income tax rates, there are often lower cost options available to you. States like South Dakota, Florida, Texas, Nevada, Wyoming, Washington, Alaska, and New Hampshire have no state income tax. Be careful as this tax saving technique often has trade-offs and requires you to establish residence in your state of choice. These trade-offs can include high sales taxes, distance from family members and friends, and lack of trusted service providers.