Posted by Swan Retirement Planning

The world of financial planning is rife with promises of success, secret tips, and product recommendations that read more like a long-winded sales pitch than true advice. In the end, there’s nothing to do but go back to your life and hope that you’ll find some catchall solution that fixes everything. As you’ll find, there isn’t one. The reason is that in retirement, write-offs are hard to find, health care costs are out of control, and income usually drops precipitously. But with a little ingenuity and planning, there’s still hope. 

The following strategies are different, without reference to any market-type of investment or insurance product. The strategies aren’t detailed plans, but possibilities designed to sow the seeds for something more in retirement, something grand. They’re pieces of a plan that would make MacGyver proud. As he once said, “Any problem can be solved with a little ingenuity.” Read, put in the research, and work with an expert to use them to their best effect.

If you reside in a high-tax state, you may consider a cash-out refinance pre-retirement. You could then use a reverse mortgage to purchase a property in an income tax-free state like Texas, Nevada, or Washington. Living there for six-plus months each year qualifies you for tax status in that state and fulfills reverse mortgage obligations, savings thousands in income tax alone. Using one or both properties for short-term rentals allows you to travel between states for business, generate income, and offset that income with write-offs for tenant improvements on both properties. That’s right – those renovations you’ve been wanting can be tax deductible! You may also be able to deduct mortgage interest on the refinance for anything used to improve the original property. If you choose to keep them long-term, the properties are likely to appreciate in value and enjoy a step up in basis upon your death, providing a tax-benefited legacy for your loved ones. 

As an alternative, consider using the cash from the refinance to build an accessory dwelling unit (ADU). With streamlined processes in place for permitting and approval to save time and money, you can build a rental unit on your existing property. Rent out your house and live in the new unit (or vice versa), generating income and write-offs in the process. This is a great way to stay in the community you love while reducing costs and taxes and increase your retirement income at the same time.

Start a Small Business

What you’re aiming for is to monetize your passion in a way that fulfills the next chapter of your life. In “The New Retirementality,” author Mitch Rapp talks about how dramatically retirement has changed since the concept was introduced. We live longer and need to fill the time with meaningful pursuits and people. Why not incorporate income and write-offs with something that improves your mental well-being at the same time? If nothing comes to mind, the rental unit scenario above would also qualify as a small business. You can pay yourself as a property manager along with all the other benefits. If all else fails, a little income from Uber or Lyft on your way to volunteering at your local nonprofit allows you to enjoy a few of the benefits without much work.

A common theme for retiring parents is to downsize and give away bulky furniture, china, and antiques to their children – but do they really want it? Instead, earn some spending cash with a sale or, if that proves difficult, simply donate it to a qualified organization and take a deduction for the fair market value. If you’re unsure of the value prior, especially in regard to antique furniture or jewelry, have it appraised first. 

Consider Medical Tourism

One health care option is to leave the country for elective and cosmetic surgeries, dental procedures, and even prescription medications. It isn’t a secret that health care in the U.S. can be more expensive than many other countries in the world. Why not check off a bucket list trip while getting your hip replaced or your teeth fixed? Medical tourism is a strategy that is already employed by many Americans every year. Surgeries that cost six figures here may be significantly less in other countries, as well as post-operative care. The first step is to use a rating agency like the Joint Commission International (JCI) or the Medical Travel Quality Alliance (MTQUA) to locate a facility abroad that specializes in the procedure(s) you’re interested in. 

Countries like Singapore, India, Thailand, and Malaysia are just a handful of options available to you. Enjoy the cost savings, see the world, and improve your health at the same time. Lastly, if you have a health savings account (HSA) or something similar prior to retirement, consider increasing your contributions. Not only could you reduce your taxable income leading up to retirement, but funds can be used on qualified medical expenses in retirement like prescriptions, co-pays, and even Medicare premiums. 

The strategy options are endless, but the goal remains the same: lower your taxes, improve your health, and increase your income in retirement. Any of the above ideas used in tandem with those your financial professional might recommend, from guaranteed income to Roth conversions, may potentially improve your quality of life in retirement. Every plan can be improved upon, especially when you have a better understanding of your options. “It’s kinda interesting how you can put one thing with another and cook up the right formula for staying out of trouble.” -MacGyver

This content has been brought to you by Impact BrandVoice. Securities and advisory services offered through Western International Securities, Inc., member FINRA and SIPC. Swan Retirement Planning and Western International Securities, Inc. are separate and unaffiliated entities. Insurance and annuities offered through Gabriel Swan. CA Insurance License #0G28190. DT# 1021663-1220.

Skip to content