I Asked Financial Experts How Boomers Can Still Grow Their Net Worth: Here’s What They Said
Written by
David Nadelle
Edited by
Jenna Klaverweiden
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Ask any successful investor the best way to grow wealth, and they’ll tell you that starting early and contributing regularly is a foolproof way to make sure you will have the means to live comfortably when you wind down your work life and start your retirement years.
But what if you are starting later than you would have hoped? “The sooner people save, invest, and prepare for the realities of aging and declining health in retirement the better their golden years will be, but it is never too late to make moves to help boost savings, income, and protect your retirement from the unexpected twists and turns of life,” said Chris Orestis, founder and president of Retirement Genius.
Baby boomers looking to grow their net worth should continue to save enthusiastically, spend sensibly and reduce major expenses, but they may also need to add a couple of different options to their financial playbook before it’s too late. Here are some expert strategies for boomers who want to grow their wealth.
Always Invest Wisely
Many experts recommend that seniors buy lower-risk investments like exchange-traded funds (ETFs) and dividend-paying stocks, which offer the possibility of both growth and income. Others support a more aggressive approach by keeping a portfolio heavy on stock market content. For Paul Ferrara, senior wealth counselor and client relationship manager at Avenue Investment Management, boomers can’t afford to neglect the positive results that “interest on interest” compounding provides.
“Compounding works even during retirement as many boomers assume that they are at the growth stage when they have set up assets,” Ferrara said. “Even after having sold the income heavy portfolio and replacing it with a balanced combination of dividend equities and low volatility bonds, wealth may continue to grow even though risk remains within a comfortable band.
“An example that I frequently run in my hypothetical models is that a portfolio of the value of $1,000,000 with a yield of 4% reinvested year after year over a decade would yield an extra $480,000 without an increase in risk allocations,” he explained.
Boost Your Retirement Contributions
You owe it to yourself to take advantage of catch-up contributions to 401(k)s and IRAs if you are still employed. Compared with younger workers, those over 50 can make a substantial contributions, and those over 60 have opportunities not available to younger workers, according to Orestis.
“Between the age of 60 and 63 people can super-size their 401(k) contributions to add more to their accounts by maxing out to $11,250 each year, and with employee matching limits that would put $81,250 into your retirement plan over three years,” he explained.
Create Additional Income
There are flexible possibilities in the gig economy that can accommodate most any lifestyle, like part-time work, consulting in your area of expertise or making money from your hobbies. Or, as Adam Hamilton, CEO of REI Hub, recommended, look into passive real estate to keep yourself busy and augment your retirement income.
“That doesn’t have to mean buying an investment property outright — though it certainly can,” Hamilton said. “Perhaps it just means converting your in-law suite or guest house into a short-term rental. Having passive income not only helps you build more wealth faster, but it can be invaluable to support your retirement lifestyle.”
Delay Taking Social Security
Working longer can guarantee you greater income. If you’re financially stable enough to delay Social Security payments until age 70, it can boost your monthly income by up to 8% annually after you reach full retirement age.
“In 2025, the maximum monthly benefit amount difference between collecting at age 62 is $2,831 vs. age 67 is $4,018 vs. age 70 is $5,108, representing almost doubling your money by waiting between five and eight years,” Orestis said.
Plan for Your Potential Healthcare Needs
Lastly, we need to talk about the biggest threat to a retiree’s assets: healthcare costs. You should always explore alternatives to Medicare/Medicaid plans and try to minimize out-of-pocket expenses whenever possible.
“For people between the age of 60-69, it is not too late to secure long-term care insurance coverage and avoid the need to spend down income and assets to below the poverty level to qualify for Medicaid,” Orestis explained.
If you have a high-deductible health plan and are still employed, you might want to think about opening a health savings account (HSA), as it provides triple tax benefits (tax-free contributions, tax-deferred growth and tax-free withdrawals for qualified medical expenses).
Like every decision involving a big expense, you have options. “If a person is in need of care but did not get long-term care insurance coverage in place, they can turn to options such as a life insurance policy settlement and a reverse mortgage to help pay for care and be able to age-in-place,” Orestis said.
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