Running out of money during retirement is one of the biggest concerns for both those who are on the brink of retirement and those who are in the early years of their career. The thought of being reliant on just savings is a lot of pressure that can leave you feeling financially vulnerable and uncertain.
However, there are proven strategies for reducing your risk of running out of money. Keep reading for 4 ways to make your money last in retirement, so you can enjoy better peace of mind and the best quality of life during your golden years.
1. Retirement Plan to have other sources of income
While many people get by relying on their retirement savings and Social Security, that can be very limiting—not to mention the fact that there’s wide speculation that Social Security may not even be a reliable source of income once many younger generations are ready to retire.
So, what can you do to prevent falling in this category of complete reliance? Plan to have one or more additional sources of income. This doesn’t mean that you need to necessarily work through your retirement. After all, you’ve earned the right to rest and relaxation.
However, you may want to look into different investment options that will pay dividends and serve as a passive source of income. You could also offer consulting services at your discretion, allowing you to bring in income without having to commit to a steady job. This way, you could take on a certain number of clients each year to bring in a certain amount of income and then spend the rest of your year enjoying the fruits of your labor.
Another option is getting a part-time job. This might come as a surprise if you’re still far off from retirement, but many retirees find themselves with too much free time on their hands, longing for the days when they had a full schedule to keep them busy and stimulated. In addition to bringing in some extra spending money, a part-time job is a good way to meet people and stay active. There are plenty of options for seniors that require little to no hard labor and are even fun.
2. Downsize your home post retirement
If you own a home, you understand that it’s your most valuable asset. While you might not be able to picture letting go of your family home—after all, there are decades of memories and sentimental value to consider—it would be an excellent opportunity to free up extra income during retirement.
Not only that, but downsizing makes it easier to maintain your home and get around as your mobility decreases. If you’re planning on traveling a lot during retirement, you won’t be home much anyways, so finding a small rental might be a smart move.
If you can’t bring yourself to even consider selling your house, consider refinancing your mortgage or looking into a reverse mortgage. These options can help you free up monthly income. Just make sure to look into reverse mortgage interest rates before making a decision. With high interest rates, you may find that this compromise isn’t worth the monthly payment.
3. Set a realistic budget
One thing that many people neglect to do before they retire is take a good hard look at their savings, projected expenses, and desired lifestyle. However, this step is essential to making your money last in retirement.
By creating a budget that factors in the above elements, you’ll be able to figure out how much money you’ll need each month and year to live comfortably. When analyzing your budget you want to consider both fixed and variable expenses, as well as potential emergency costs that you might have to accommodate. Giving some flexibility to your budget is a good idea because you never know what life may throw at you.
If the thought of crunching numbers to create your budget makes your head spin, don’t worry, there are plenty of online tools and apps that can simplify the process for you.
4. Eliminate unnecessary expenses
If you’ve done your budget and you’re not comfortable with how much discretionary income you’ll have to live off of, you should take a look at your expenses. For most people, there are at least a few unnecessary costs that can be cut out with little to no inconvenience.
Depending on how much more spending power you want to have, you may have to show yourself a little tough love. Do you really need all those subscription services if you’re going to be traveling the world most of the year? Or, can you cut down on eating out since you’ll have more time to prepare your meals at home?
You’d be surprised how a little reevaluation can open up new opportunities in your budget.
Depending on your lifestyle and personal circumstances, you may be able to implement one or all of these tips to help set yourself up for a more financially secure retirement.