Planning out your retirement finances and lifestyle can be challenging and depends on multiple factors. Fortunately, there are many things that can help you in retirement, beyond your 401(k) or other retirement accounts.
Here are some other things, financial and social, that can make retirement a little easier:
Health Savings Account
If you have a health savings account (HSA), the money in the account can be used to cover deductibles and other out-of-pocket medical expenses. The money you contribute to your HSA is tax-deductible (up to a certain point), and the money in the account can be invested and grows tax-free. It can also be withdrawn tax-free if used for qualified medical expenses.
Getting closer to retirement age can sometimes mean higher medical costs–having extra money to cover these costs can be helpful. Once you turn 65, you can use money in an HSA for non-medical expenses as well, though you may owe taxes on money withdrawn for these expenses.
Permanent life insurance
If you took out a permanent life insurance policy, such as a whole or universal life insurance policy, you’ll know that the money you put into the policy builds cash value. You can borrow against this cash value and use it for any reason, including to supplement income in retirement. This can be helpful during market downturns when you don’t want to withdraw from (or withdraw as much) from stock market-heavy investments like 401(k)s–an answer to your question if you wondered, is whole life insurance worth it?
Having less (or no) debt
Having a paid-off home can free up a lot of money that would otherwise go towards your mortgage payments. This extra money can be used to cover living expenses or other costs in retirement.
While a mortgage is often your largest expense, having paid off other debts, like car loans and credit cards, can be extremely helpful in retirement. Not having to make payments will free up your income for other things, and allow you to do more with less.
A retirement community
There are many communities designed specifically for retirees. These can be great places to socialize and stay active. There are several different types of retirement communities, so you’ll want to research the different options to see which one would be a good fit for you. Some examples are age-restricted communities, which restrict membership to people over a certain age, usually 55+, and active adult communities, which offer amenities and community programs.
Hobbies and interests
Your hobbies and interests can also help you in retirement. When you’re no longer working, you’ll have time to pursue new ways to fill up your days. Plus, if you have a hobby that can be monetized, that can be a great way to supplement your other sources of income. And if you have a passion for something, pursuing it can help keep you active and engaged.
These are just a few of the things that can help you in retirement. Your 401(k) is important, but it’s not the only thing that can help you out. There are many other things, financial and social, that can provide assistance during your retirement years.
All investments carry some level of risk including the potential loss of all money invested. The primary purpose of permanent life insurance is to provide a death benefit. Using permanent life insurance accumulated value to supplement retirement income will reduce the death benefit and may affect other aspects of the policy.