Money tips for cash-strapped retirees

4. Think about the roof over your head. If you own your home, you can sell it and make up to $250,000 in profit — or $500,000 if you’re married — without owing any capital gains taxes. After doing that, you could move into more modest accommodations in your area, or, like thousands of Americans, you could relocate to an entirely new part of the state or country that would be much more affordable for you. If you know you want to stay put, though, here’s another option: You could get a reverse mortgage. Such loans allow homeowners age 62 or older to convert home equity into cash without having to move or assume extra debt. If you own your home outright or nearly so, a reverse mortgage can help you financially at a point in your life when you may really need it. Most reverse mortgages require no repayment as long as you live in your home. The loan must be repaid in full, along with interest, when the last living borrower dies, sells the home or moves away. To learn more about this option, read my recent “10 Tips” column on reverse mortgages and visit this AARP site.

5. Wait to collect Social Security. Your Social Security benefits can kick in for you once you turn 62, but you’ll get more money if you wait until your “full” retirement age — (which is 66 for people born between 1943 and 1954). You’ll get even more if you can wait until you’re 67, 68, 69 or 70. Consider this scenario: People eligible for monthly benefits of $1,610 at age 62 would receive $2,190 a month by waiting until age 66 and $2,945 a month by waiting until age 70. Those baseline amounts would be increased in future years to cover upticks in the cost of living.

6. Keep working. To help you in your quest to postpone those Social Security payments, you could continue to work past your retirement age. This notion may sound terrible to you initially, but consider this: The regular routine and companionship you get from your job may be more meaningful to you than you realize. And once you give up your job, it may be harder to get back into the work force than you realize. Because of your experience and maturity, your current employer may go to great lengths to keep you — but a company that doesn’t know you from Adam may not take a chance on you after you’ve already retired. Here’s one approach that could keep some income rolling in while still giving you a break: You could make arrangements for a “phased retirement” and start working part time in your current job.

7. Tap your life insurance if you can. Do you have a cash-value life insurance policy? If so, you could benefit from that policy now while you’re still alive. This could come in handy if you’re strapped for cash and in need of more serious help than your beneficiaries. You can take out a cash-surrender loan — which essentially amounts to a loan that you won’t ever have to pay back. For details, contact your insurer and also visit this site.

Next week's 10 Tips topic Holiday tipping Have you ever gotten the sense that you really should be tipping someone at the end of the calendar year, but felt unsure about exactly how to proceed? Then next week’s column should be of help to you. Do you have advice to share about tipping regular service providers? If so,   please share it here.

8. Save on prescription drugs. As referenced above, medical costs can wreck the budgets of the most frugal retirees — and prescription drugs can play a big role in contributing to the damage. To help combat this trend, Consumer Reports has launched a fantastic free site called “Consumer Reports Best Buy Drugs” to help you identify the least expensive medicines that are effective for certain conditions. What’s more, pharmacy benefit manager Medco Health Solutions recently released a helpful, easy-to-understand guide called “Prescription for a Healthy Nest Egg: Half a Dozen Ways to Lower Your Drug Costs and Stretch Your Retirement Dollar.” You can download the entire guide for free through this link.

9. Seek out property-tax relief. It’s imperative that you find out whether your state or local government offers property-tax breaks for older homeowners. Such forms of relief have been scaled back in recent years in many parts of the country, but if they’re still available where you live, take advantage of them without delay. If you learn that you’ve unwittingly been paying a higher share of property taxes than necessary for some time now, apply for a refund with your tax assessor.

10. Know where else to turn. If it’s obvious that you simply cannot cover your expenses, start the process of tapping into government programs for older Americans on low or fixed incomes. To find out what kind of federal and state support might exist for you, fill out the confidential questionnaire at BenefitsCheckUp.org. You also can track down many more services and resources through the Eldercare Locator, a nationwide assistance directory provided through the U.S. Administration on Aging. Call (800) 677-1116 or visit this site.

Sources and resources:

• AARP
• Consumer Reports Money Adviser
• ConsumerReports.org
• RealEstateJournal.com, The Wall Street Journal Guide to Property
• SmartMoney Magazine
• USA Today
• Financial Planning Association

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