Study these
strategies to make your golden years gleam.
Maryalene LaPonsie • May 17,
2021
One scary part of retirement is knowing you could have 30
more years in front of you, but only a limited amount of cash available to
finance them. How can you make sure your retirement account doesn’t run dry
before saying your final goodbye?
Following are numerous smart strategies you can use to
stretch your money — however little or much you have — over the decades to
come.
1. Budget, budget,
budget
Ugh. This is no fun, right?
You may not want to spend your free time working on a
budget, but there is no better way to make your money last than to be
intentional about its use. Without a spending plan, you could find yourself
running through cash in no time.
The good news is that the digital age has made it easier
than ever to keep track of money. One of our favorite tools for doing this is a
program called YNAB (aka
You Need a Budget), which helps you track spending, and create and live within
a budget.
2. Embrace senior
discounts
Senior discounts are one of the best parts of getting older.
Once you hit a certain age — often 55 or 60 — you can start getting discounted
meals, travel, tickets and more. Use these reduced prices to make money last
longer in retirement.
To get started, check out our stories on senior discounts
from:
·
Airlines
·
Hotels
3. Move to a smaller
house
Once the kids are gone, you might not need so much space.
Consider downsizing to a smaller home. You could find maintenance, utilities
and tax bills all get smaller as well.
Alternatively, to defray the costs of a large home, consider
renting out extra space to visitors through an online marketplace such as Airbnb.
4. Relocate to a
less-expensive area
Moving to new states — or even countries —
can cut costs.
Some states, such as Florida, are known for being
tax-friendly. Others, such as Midwestern states, are known for their low cost
of living. Either way, such locations help you stretch your money in
retirement.
Some retirees leave the United States completely. They opt
for places like Mexico or Panama, where even small retirement savings can
translate into a comfortable life thanks to lower costs of living or a
favorable exchange rate.
See
Also:
The 3 Biggest Regrets of Retirees — and How to Avoid Them
5. Sell what you
don’t need
Add to your retirement war chest by selling the items you no
longer use. Maybe camping days are done, or you decide woodworking is a hobby
that will never take off. And all those Disney movies? Probably not essential
in this phase of your life. Keep a couple for when the grandkids visit and make
some money off the rest.
Garage sales, Craigslist classifieds and sites like Decluttr (which buys your old tech tools
and devices) are all places to sell your excess for cash. For more ideas, read
“Don’t Toss These 7
Household Items — Sell Them.”
6. Get the things you
do need for cheap
When you do need to buy things, you’ve got the advantage of
having more free time to search for a deal. Scour garage sales, classified ads
and secondhand stores for steals on what you want.
If you’d rather buy new, see “15 Golden Rules for
Saving on Every Purchase.”
7. Become a one-car
household
Speaking of things you no longer need, is it really
essential to have two cars after you retire?
Sure, it’s nice to have the freedom to go to one place while
your spouse goes to another. But is the convenience worth the extra car
payment, insurance, maintenance and registration fees?
Your money will stretch further in retirement if you’re not
using it on a vehicle you drive only occasionally.
8. Refinance or
consolidate your debts
In a perfect world, you’d have debts paid off before
retirement. However, we don’t live in a perfect world. We live in the real
world.
If you have debt, you can save money by lowering your
interest rates. For example, you may be able to move balances from high-interest
credit cards to one with a low introductory rate.
For more options, stop by our Solutions Center and
use the credit card
comparison tool. Select “0% APR” from the menu on the left to limit
the search results to that type of card.
If you need professional help with your debt, consider contacting a
reputable credit counselor.
9. Travel wisely
When you don’t have to plan vacations around work or school
schedules, a whole world of travel savings opens for you. Travel in the
off-season to get great deals and avoid the crowds. Or be
spontaneous and go wherever the latest deals take
you.
10. Manage your
sequence of returns risk
Sequence of returns risk, also known as sequence risk,
essentially means that if the stock market tanks when you start taking
withdrawals from retirement accounts, your balance may never fully rebound even
if the market does.
In other words, you want to avoid having to withdraw money
from your accounts when the market is down. There are several ways to do this,
such as keeping enough money in a cash account to ride out a bear market or
investing conservatively to minimize losses in a crash.
Since this can be a complex topic, working with a financial
professional to structure withdrawals is always a good idea. Wealthramp is a free service that can connect you with
fee-only fiduciary financial advisers in your area.
11. Stay active
Medical expenses can be a major drain on a retiree’s
finances. However, you may be able to minimize your expenses by staying active
for as long as possible.
Physical activity is key to preventing and managing chronic
diseases and lowers your risk of developing dementia, according to the
U.S. Department of Health and Human Services.
To learn more about the benefits of physical activity, see “7 Surprising
Benefits of Staying Fit in Retirement.”
12. Understand your
health care benefits
When you need health care, understand the benefits and
caveats provided by your plan. For most seniors 65 and older, that plan is
Medicare.
For instance, if you’ve signed up for a Medicare Advantage
plan, one of the two main types of the national health insurance for seniors,
you may have to go to in-network providers and pharmacies or else pay more. If
you opt instead for the other type, known as Original Medicare, and you travel
internationally, your care at a foreign hospital may not be covered.
In addition to knowing how your coverage can cost you, you
should know how it can save you cash. There are nearly two dozen health
care services that you get free with Medicare, so use them to the
fullest.
13. Get ready for
long-term care costs
In addition to regular health care expenses, you may have to
pay for long-term care. This type of care doesn’t come cheap, and is not covered
by Medicare except in very limited situations and for short periods.
Without a plan for how to pay for long-term care costs, you
could find retirement money gone in a flash.
If you’re young enough, you could buy long-term care
insurance. Otherwise, consider whether you could use a reverse mortgage,
a long-term care annuity or living benefits from a life insurance policy to
preserve assets.
14. Set boundaries
with the kids
A 2018 Merrill Lynch
study revealed that parents in the U.S. collectively spend
about $500 billion per year helping their adult children cover everyday
expenses from housing to cellphones. That’s twice as much as those parents save
for retirement.
Moms and dads, this has got to stop. If you want your money
to last through retirement, you’ve got to stop giving it to kids who are old
enough to support themselves.
Set clear boundaries on when and how much you expect to
spend on grown kids and then stick to your guns. For pointers, check out “6 Ways to Help
Adult Children Without Going Broke.”
15. Work longer
If you’re hitting your golden years with little savings in
the bank, the best way to stretch those dollars is to avoid using them at all.
Working full time or even part time not only pads your bank account but may
also let you delay claiming Social Security benefits.
For every year between your full retirement age and
age 70 that you delay receiving monthly Social Security benefits, you get a boost of up
to 8% in your monthly payment.
Disclosure: The information you read here is always
objective. However, we sometimes receive compensation when you click links
within our stories.
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