In the U.S., people in the middle class often live a comfortable life — but that doesn’t mean all of their needs are met. Certain things, like homeownership and healthcare, can still be major financial stressors for middle-class individuals. This is true of those who are still working and those who are retired.
If you’re retiring in the middle class and want to continue to build wealth — either for your own goals or for your descendants — you have options. GOBankingRates spoke with several financial professionals to see what they suggest. Here’s what they said are some of the best ways for middle-class people to become wealthy in retirement.
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While you should ideally have at least some money in investment accounts, chances are you also have some savings in the bank. But don’t leave your money in a traditional account — use a high-yield account instead. While this won’t make you rich on its own, it can help your money grow and lead to more wealth over time.
“A high-yield savings account is a must-have for all. Whether it is for your emergency fund, your renovation fund or vacation fund,” said Melissa Murphy Pavone, CFP, CDFA and director of investments at Oppenheimer & Co. Inc. “It is a secure way to grow your money, while preserving liquidity.”
If you already have a high-yield savings account, check the rate and compare it with other options. If you find a bank with higher yields, you might want to make the switch as this can help your money grow faster.
Chris Urban, CFP, RICP and founder at Discovery Wealth Planning, suggested taking on a part-time job in retirement. On the one hand, this lets you enjoy certain social benefits that come with staying in the workforce. Financially, it’s also a great way to keep building your nest egg or generational wealth.
Plus, if you’re able to live on the extra money you’re earning from your part-time job, you can draw less from your retirement or investment accounts. This means the money in those accounts can continue to grow unhindered.
While not for everyone, having a certified financial planner (CFP) could help if your goal is to become rich.
“Creating financial wealth is an ongoing journey. Having a CFP in your corner will offer valuable personalized advice and holistic financial planning,” said Pavone. “When advising a client on creating an income stream in retirement, I stress the importance of assembling a team of professionals to help navigate the complexities of the process successfully.”
Besides a CFP, this team can also include a certified public accountant (CPA). With the right team — and the personalized guidance they can provide — Pavone said it’s often easier to create a road map to wealth.
“Together, the team of professionals will address not only the financial considerations and tax implications, but ultimately optimize the outcome for the client’s financial future,” she said.
This might be tricky if you’ve already cut as many costs as you’re comfortable with, but downsizing can free up extra cash for more investments. This, in turn, can help you build long-term wealth.
“Perhaps you downsize your home, move to an area domestically or internationally with a lower cost of living and/or generally reduce your overall expenses perhaps through minimal lifestyle adjustments,” said Urban.
Large or small, these changes can get you in a better position financially. This is especially the case when you’re able to cut costs enough to where you can comfortably live on Social Security or other retirement benefits.
“You could be in a situation where sources of guaranteed income (i.e., Social Security, pensions, etc.) provide enough income to cover most (or all) of your living expenses and then your retirement and investment accounts can just largely remain invested and continue to grow over time,” said Urban.
Lowering your expenses does more than free up some extra cash each month. It also gives you more money for investments that can build upon themselves and, ultimately, make you wealthy.
“The best way to retire rich is follow the advice of The Rolling Stones and get time on your side early in your career,” said Paul Tyler, a licensed insurance agent and CMO of Nassau Financial Group. “Simply live on 80% of a middle-class salary and consistently invest the other 20%. At even a conservative growth rate, you can end up with a shockingly large nest egg when it comes time for you to retire.”
“For many people, being wealthy in retirement means not having to worry about how you’ll afford basic living expenses. Having a regular source of income to supplement Social Security can give retirees peace of mind,” said Jennifer Schell, a certified annuity specialist for Annuity.org.
Getting a fixed annuity is one way to boost your retirement income and free up more money for other investments that can make you wealthy.
“You can grow your retirement savings at a guaranteed interest rate that’s often higher than what a CD or savings account would offer,” said Schell. “And when you’re ready, you can turn on that income stream and know that you’ll continue receiving predictable income each month for as long as you live.”
Just because you’ve retired doesn’t mean you should forget about your investments. If you want to continue to build wealth in retirement, review and diversify your investments every so often to ensure they’re meeting your goals.
“By spreading investments across a variety of asset classes, sectors and geographies, one can navigate the ups and downs of markets with greater ease,” said Khwan Hathai, certified financial planner at Epiphany Financial Therapy. “This not only helps in managing risk but also aligns with a mindset that values stability and growth, acknowledging that wealth building is a marathon, not a sprint.”
