Let's be honest. Every retirement is different. But one thing is certain: seniors with guaranteed income, employer-provided assistance, and a clear spending plan are some of the most satisfied retirees. According to a recent study by the Retirement Security Research Center, comfortable retirees often had multiple and guaranteed sources of income while those struggling didn't have enough savings or had financial challenges like medical bills, rent or mortgage, and debts.
This is quite unfortunate, since most seniors fall into the latter category. In 2017, the research center reported that seniors need $250,000 to live comfortably in retirement but most Americans aged 55 and above had only saved an average of $72,000. If you or a loved one is one of them, don't lose hope. Here are five moves you can make right now to increase your chances of having a comfortable retirement.
Make Late Saving Sprints
Although this may seem like an obvious move, it's easier said than done. It will require you to make painful cuts to your lifestyle. The good news is that you can still collect a small sum of money before you fully quit the workforce if you want to.
For instance, if you save $500 a month and you're 55, you can easily save over $120,000 by the time you're 65. Double that monthly figure to $1,000 and you will be close to the recommended amount to have before retirement.
Move to a Smaller House or an Affordable Area
If you're renting or have a mortgage, it may be wise to downsize. This will help you reduce your biggest expenditure and maximize your retirement budget. You won't be alone. A survey by the Demand Institute shows that over 40% of Americans aged 64 plan to move. Most of them end up moving to smaller homes.
To make the transition easier, take it as an adventure. Choose a place that's easy to live in, like a lower-cost area where you don't have to economize all the time.
Create a Clear Spending Plan for Retirement
Quitting the workforce doesn't mean abdicating your financial responsibilities. Frivolous spending can easily destroy your financial life. Many retirees think they can spend as they want with the little savings they have. Others think money can only run out if they don't spend thousands of dollars on brand new fishing boats. But that's not always the case.
Financial advisors warn that it's the little purchases and upgrades that tend to add up over time. Once you know you don't have guaranteed income, create a spending plan as soon as possible. If you don't, you risk running out soon.
Plan for Medical Costs for Retirement
Medical bills are some of the biggest financial challenges facing retirees. Many people aren't familiar with the Medicare concept entirely. That's why many underestimate out-of-pocket costs. According to a 2018 study by Vanguard Research Center report, for instance, many 65-year-olds were expecting to pay up to $7,000 per year in premiums and out-of-pocket costs. But the costs increased to over $20,000 in some cases.
To stay on top of things, look for ways to reduce medical costs in retirement. For starters:
- Carefully study your current Medicare plan
- Determine if you qualify for Medicare savings programs
- Build your emergency fund
- Make medical costs a crucial part of your retirement budget
Don't Hesitate to Ask for Help
On matters of finances, it's usually easier to advise than to receive advice. And if you've always kept your financial life to yourself, it can be difficult to ask for help. But if you want to have a comfortable retirement, it's wise to keep an open mind. After all, the financial landscape has changed tremendously over time. Today, retirement is very different from what it was many years ago.
Start by identifying where you need help. Then find a trusted family member, an advisor, or a friend to help. Asking for assistance can help safeguard you from making dire retirement pitfalls. Good luck!