If you’re like most senior Americans, you’re retiring with less money in your retirement account than you need to live comfortably. But it gets worse. One in four have no retirement savings at all, and with inflation rates rising, most seniors are concerned.
If you’re retired, (or about to be) you may be wondering if you have enough saved for retirement and how to manage what you have to make it last. Here are 5 tips to help you get where you need to be.
How Much Retirement Savings Do You Need?
Hopefully, you’ve already calculated this, but for those who haven’t, here are some things to keep in mind:
- Aim to save 10-15% of your gross income each year (preferably starting in your 20’s). Of course, you’re getting a late start, it’s best to save more if you can.
- You can also use online calculator tools (like the one offered by NerdWallet) to help you determine your specific financial needs and the best retirement savings goal for you.
- Just keep in mind that how much you need depends upon your retirement lifestyle and if you plan to live on less than you did while still in the workforce.
Now that you’re armed with that information, here are some tips for saving money after you’ve taken the plunge.
1. Come Out of Retirement (or Delay It)
Of course, if you haven’t retired yet and are facing a savings shortfall, consider delaying your retirement date to bank a few more dollars.
But if you’re in retirement you can still return to work, which is also an option if your health allows. Of course, you probably can’t return to your previous occupation, but you still have options. Retail and hospitality are great industries if you’re semi-retired. Consider picking up some part-time hours at a location near you.
You can also get short-term work at a temp agency. Depending on your abilities, you could turn one of your hobbies into a part-time business by selling your artwork or other creations or services. Regardless of what you choose to do, commit to putting some of what you earn into savings.
2. Delay Drawing Social Security Benefits
You can increase your benefits by 8% per year up to age 70 if you delay drawing your social security after retirement age. This strategy applies to those born in 1943 or later. You’re actually saving more money as you wait. Even if you draw from your other retirement accounts, you can defer drawing social security.
3. Consider a Reverse Mortgage
This option isn’t for everyone and is a controversial topic in some circles. It can be a good long-term solution to retirement savings shortfalls if you’re a homeowner 62 and older who has enough home equity. You must also plan to live in your home for the rest of your life if you don’t want to pay back the reverse mortgage.
But it allows you to receive cash for the value of the equity in your home. People usually receive it as a lump sum or as monthly payments. If you’re still paying your mortgage, it can help offset those monthly payments or be used for any other expenses you have. But you must abide by federal guidelines for a HECM (home equity conversion mortgage) or risk losing your home.
4. Downsize What You Can
It may be that at this point in your life, you could let go of some things. Could you downsize your home? If you don’t yet have a reverse mortgage and are in a good position to sell, you could buy a smaller, less expensive house and fatten up your retirement savings account. Smaller homes also cost less to heat, cool, and maintain. In some cases, it might be more economical to move to a senior retirement community.
But your home is not all you should consider downsizing. You can offload other things of value that you have but don’t really need, like the second vehicle in your driveway, expensive jewelry, etc.
And don’t forget that a simple way to beat financial stress is to create a budget a stick to it.
5. Move to Lower Your Cost of Living
Did you know that you could save tens of thousands of dollars per year just by moving to a new city, state, (or even country)?
The cost of housing, utilities, goods, and services all vary by location, and sometimes dramatically. If you’re looking for long-term solutions for expense reduction and are well-positioned to sell your home, this could be a viable option for your retirement years.
Check out the top 5 U.S. states with the lowest cost of living:
- New Mexico
And the top 5 U.S. cities with the lowest cost of living:
- Kalamazoo, MI
- Harlingen, TX
- McAllen, TX
- Jackson, MS
- Amarillo, TX
Considering these relocation options may be a financially smart move and even add a little adventure to your life.
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