Financial Planners Reveal The Strategies That Can Boost Your Wealth In Retirement

Whether retirement is a few decades away or a few years, it’s important to start thinking about it and taking action as early as you can.

We connected with multiple financial planners and advisors to understand what the best methods were for saving for retirement and developing a spending plan. These were some of the top strategies they recommended to their clients.

Start With Online Retirement Calculators

Not sure where to start with your retirement planning? Get an estimate of how you’re doing with your retirement plans with online calculators. However, you’ll need to do some research and dig deep to understand what you want out of retirement before you begin.

“There are variables you need to determine to to be able use the retirement calculators,” said Kassi Fetters, a certified financial planner (CFP) with Artica Financial Services. “These are how much you want to spend annually in retirement, how much you currently have in retirement, how much you’re currently putting into retirement, and [whether] there are big purchases you’re planning to make in retirement.”

Utilize a Roth 401(k)

For those who may not be eligible to contribute to a Roth individual retirement account (IRA) due to its income limits, you may be able to put money in a Roth 401(k) instead. These retirement accounts don’t have income limits, but you’ll have to check if your employer offers one.

“For clients in their peak earning years, contributing to a Roth 401(k) is incredibly valuable. It allows them to lock in today’s tax rates and create a pool of assets that will generate tax-free withdrawals in retirement,” said Kate Feeney, a CFP at Summit Place Financial Advisors. “That flexibility is critical when managing required minimum distributions, Social Security timing, or unexpected expenses later in life.”

Give Yourself a “Retirement Paycheck”

Rather than focusing on rules, like the 4% rule, that are designed to determine your yearly spending in retirement, Jared Gagne, a CFP with Claro Advisors, advises people to think about spending on a more granular level.

“One of the best retirement strategies I recommend is to think in terms of creating a ‘retirement paycheck,’” said Gagne. “I work with clients to calculate their true annual spending needs, then design a sustainable withdrawal plan that pays them monthly just like a paycheck. It makes the psychological transition from earning to spending far less overwhelming.”

Hold Off Claiming Social Security If You Can

While some people may opt to collect Social Security benefits early because they suffer from health issues or have a family history of certain medical conditions, those who are able to wait should consider doing so, as waiting until full retirement age (FRA) or later (up to age 70) will give you a much larger monthly benefit.

“For many clients, delaying benefits closer to age 70 can significantly increase guaranteed lifetime income, acting almost like an inflation-adjusted annuity. But this must be weighed against health, life expectancy, and other available income sources,” said Nathan Sebesta, a CFP at Access Wealth Strategies.

Take Advantage of Roth Conversions

And for those who don’t have a Roth IRA or 401(k), there are still ways to move money into a Roth account. With a Roth conversion, people transfer pre-tax retirement money into a Roth IRA and must pay taxes on the converted balance.

“Roth conversions can be a great strategy for retirees who often find themselves in a lower tax situation, especially before starting Social Security or required minimum distributions from IRA accounts,” said Michael Pumphrey, a CFP at Tanglewood Total Wealth Management. “The idea is to pay tax at a lower rate to move those pre-tax savings into a Roth IRA, where funds can benefit from tax-free growth and withdrawals.”

Get a Financial Plan

Most importantly, prepare for retirement by establishing a financial plan beforehand. A financial planner can create a personalized approach based on your goals and desires.

“The ultimate best retirement ‘strategy’ is to have a robust financial plan in place,” said Georgia Lord, a CFP with Corbett Road Wealth Management. “This plan should include cash flow analysis, retirement goal planning, tax planning, insurance analysis, and estate planning, among other important aspects of one’s financial picture.”

The Bottom Line

These expert-backed strategies can help you achieve your retirement goals, whether it’s to travel the world or just afford your day-to-day expenses. While all of these strategies may not be applicable to you, consider getting in touch with a financial advisor who can help you determine whether it’s worth it to do a Roth conversion, when the best time to collect Social Security is, and more.