Many retirees wish they had more income during their golden years. The good news is, you might be able to increase your retirement income by making smarter financial choices, without necessarily needing to save more. Research suggests that by focusing on seven key strategies, retirees can increase their income by up to 30% or more.

Here are seven ways to enhance your retirement income:

1. Time Your Social Security Benefits Strategically

When you start collecting Social Security benefits can have a significant impact on your retirement income. While you can begin receiving benefits at age 62, doing so will reduce your monthly payments permanently by up to 30%. If you wait until your full retirement age, you’ll receive your full benefit amount. Even better, delaying benefits beyond your full retirement age can increase your monthly payments by 8% per year, up until age 70. For example, a $1,000 monthly benefit at full retirement age would be reduced to $700 if taken at 62, but it would rise to $1,240 by waiting until age 70.

However, delaying your Social Security benefits may not be the right choice for everyone, depending on your financial situation and health.

2. Consider a Dynamic Withdrawal Strategy

A static withdrawal strategy, where you take out a fixed percentage of your savings each year, may not be the best approach. Instead, consider a dynamic withdrawal strategy that adjusts based on market performance. In good years, you can safely withdraw more, and in years when the market underperforms, you can reduce your withdrawals to preserve your assets. This flexible strategy allows retirees to spend more when their portfolios are performing well without running the risk of depleting their savings too quickly.

Studies show that using a dynamic withdrawal strategy can provide more income over a 30-year retirement compared to a flat 4% withdrawal rate. For example, retirees starting with $1 million could receive hundreds of thousands of additional dollars over their retirement using a dynamic approach.

3. Maximize Tax Efficiency

Minimizing taxes in retirement is crucial to ensuring that you can keep more of your income. During retirement, your goal should be to reduce your taxable income by withdrawing from the right types of accounts. Generally, it’s best to start with taxable brokerage accounts, as they are taxed at lower rates in the early years of retirement. You should leave your tax-deferred accounts, like your 401(k) or traditional IRA, to grow for a longer period.

Additionally, tax-free accounts like Roth IRAs should be tapped last because they offer tax-free growth and aren’t subject to required minimum distributions (RMDs). Managing your withdrawals in a tax-efficient way can help you keep more of your income in your pocket.

4. Optimize Asset Location

Asset location refers to the strategy of placing your investments in accounts where they are most tax-efficient. For example, assets that generate income, such as bonds or dividend-paying stocks, should be held in tax-advantaged accounts like your 401(k) or IRA. On the other hand, tax-efficient assets like municipal bonds or index funds, which are less likely to generate taxable events, should be held in taxable accounts.

By strategically positioning your investments in the right types of accounts, you can potentially save thousands in taxes over time, increasing your available retirement income.

5. Add Annuities for Guaranteed Income

Annuities can provide guaranteed income during retirement, which can fill the gap between your essential living expenses and other sources of income like Social Security or pensions. With an annuity, you exchange a lump sum for guaranteed periodic payments for life. This can give you peace of mind, knowing that part of your expenses are covered no matter what happens in the market.

Research suggests that adding annuities to your retirement plan, combined with a more aggressive investment strategy, can increase your annual retirement spending ability by as much as 29%, while also reducing market risk.

6. Maintain a Cash Cushion

Having a cash reserve or emergency fund large enough to cover at least one year of expenses can provide stability during market downturns. This safety net allows you to avoid selling investments at a loss when the market is down, and it gives your portfolio time to recover. A cash cushion can also give you the flexibility to take on more investment risk and potentially earn higher returns without worrying about running out of money in the short term.

Additionally, permanent life insurance policies can also serve as a source of cash, as they accumulate cash value over time that you can borrow against if needed. However, keep in mind that borrowing from the policy may reduce its cash value and death benefit.

7. Review Your Asset Allocation

The way you allocate your assets can have a huge impact on your retirement income. A conservative allocation of bonds and cash might provide stability, but it could also leave you vulnerable to inflation, which can erode your purchasing power over time. Maintaining some exposure to stocks can help you beat inflation and grow your portfolio. Diversifying across sectors, asset types, and even global markets can provide more growth potential and reduce risk.

Many retirees become too conservative with their portfolios, but a balanced approach that includes some exposure to stocks can improve long-term returns without taking on excessive risk.

Conclusion

Retirement doesn’t have to mean cutting back on your lifestyle due to limited income. By making strategic decisions about Social Security, withdrawals, taxes, asset location, and more, you can increase your retirement income without saving more. By optimizing these factors, you can improve your financial outcome and ensure a more comfortable retirement.