These 15 Genius Hacks Will Help Make Your Retirement Savings Last
People are living longer, which means having a well stocked nest egg is imperative to living your golden years in happiness. More folks are living well into their 90s, which means having enough cash before you retire is vital to a happy, stress-free retirement.
Some moves you can make before you retire include maxing out your 401k, stocking your emergency fund, and protecting your investments from risk. Once you reach that magical age when you can retire, here are a few steps you can take to keep the money flowing for years to come. You might learn a new language for the hack on page 14.
1. Envision what retirement looks like
Create a realistic budget before you ride off into the sunset. You can use this worksheet to assess your ongoing and one-time living expenses. Don’t forget to take your age, income, and savings value, including pensions and investments into consideration, CNN reports.
“To feel reasonably secure that you won’t outlive your savings, I’d think you’d want to see an estimate of 80% or better that your savings will last a lifetime,” according to personal finance editor and author Walter Updegrave. “Generally, if you start with an initial annual withdrawal equal to 3% to 4% of savings — or $30,000 to $40,000 for a $1 million nest egg — and then adjust that amount each year for inflation to maintain purchasing power, you’ll likely come in close to that 80%-or-better target.”
Next: Go smaller.
2. Travel light
Do you still need the big house, three cars, and membership to the country club? Or could you dump some the trappings of family life and increase your retirement cushion?
Although your retirement years are meant to be a time to explore and play, consider eating out less and finding cheap or free ways to have fun.
Next: Go to your happy place.
3. Identify your happiness
Spend money on what makes you happy and keeps you young, CNN reports. The American College found that retirees who spent money on travel, social activities, hobbies, and dining out were the happiest because they remained socially engaged and active.
Next: Keeping track of this can drive costs down.
4. An apple a day…
Reduce medical expenses by maintaining a healthy lifestyle in retirement, according to Investopedia. While not all illnesses are preventable, you can reduce your risk by exercising, limiting your alcohol intake, eat healthy, and being vigilant with preventative healthcare.
Next: Don’t pass up these.
5. Get your discounts
Many groan when they first receive their AARP card and miss the silver lining. Those over age 50 can save a ton of money by taking advantage of discounts on movies, travel, car rentals, hotels, retailers, restaurants, and more.
Next: Never pay these.
6. Don’t pay investment fees
Investment manager fees can suck the life out of your nest egg, especially if you are paying more than 1%, according to Investopedia. One way around this is to search for a lower fee alternative using an app like FeeX.
Next: Wait for it…
7. Wait to tap into Social Security
The longer you wait to collect your Social Security benefits the more cash you’ll ultimately see, Bankrate reports. If you collect at age 62 your benefits are reduced by 30%. However, if you wait just four more years, your benefit reduction is only about 6.7%.
Next: Or you could keep doing this for a while.
8. Keep working
Head into a new career or work part-time to pad your retirement savings, Kiplinger reports. The longer you can put money into savings, versus taking it out, the better off you are in retirement.
Next: Consider making this move.
9. Retire in a tax friendly state
Some states tax retirees less, according to Kiplinger. This includes lower property taxes, making withdrawals from tax-deferred retirement programs, and pensions. Some states that tax retirees less include Wyoming, Alaska, South Dakota, and Mississippi. States that tax retirees the most include Minnesota, Connecticut, Kansas, and Vermont.
Next: Hold out longer.
10. Delay retirement
The median age for retirement is around age 62, but if you can hang on longer, you can save even more, Bankrate reports. Those who have less than $200,000 in savings should reconsider retirement. You probably won’t have enough to cover the next 30 years of retirement taking inflation into consideration.
Next: Safely boost your ROI.
11. Perform an investment checkup
Your appetite for risk and market fluctuations are just a few reasons why you should consider rebalancing your portfolio. A portfolio rebalance protects you from being more open to risk than you’d like, but also less open to returns if your investments are too conservative. While some money managers suggest rebalancing every year, others consider rebalancing every quarter or month is a good idea, CNN reports.
Next: Take it slow.
12. Withdraw money slowly
Withdraw about 4% of your retirement assets each year to maintain a decent cash flow for about 30 years, according to Time.
Next: Plan for the future.
13. Use this investment strategy
Establish specific buckets of money based on each retirement phase, Time reports. The first bucket would include risk free investments, like fixed annuities, that you use during the first 10 years.
Once that bucket dwindles down, the second bucket is waiting which contains moderate risk investments like government-backed bonds. The third bucket includes more risky investments, which will likely sit for about 20 years before you need the money.
Next: Leave the country.
14. Move overseas
Some retirees are finding that living in a foreign country really stretches their dollar. Some of the best places for retirees to move include Mexico, Panama, Ecuador, and Costa Rica, according to AARP.
Next: Don’t forget to check this out next year.
15. New tax plan
Tax laws will change in 2018, bringing some benefits to retirees. Some changes include caps on tax deductions and the elimination of dependent exemptions. Also, plan on seeing changes in mortgage interest, and medical deductions.
Check out The Cheat Sheet on Facebook!