You must have stopped working but that doesn't mean your financial planning has to do so too. Frugal living is the key to retirement bliss. These simple ways to stretch your retirement are bound to make life easier for you. If you are 60 right now, you can expect to live a maximum of another forty years. Are your retirement savings enough for that large a period of time?
Determine Your Needs
Understand the kind of lifestyle you have right now and the kinds of needs you will have when you retire. These could be your medical bills, or dentist visits. Many people think they can retire early because they think the savings they have will be enough to sustain them. Hello?! Have you thought of inflation? Your health? The cost of maintaining this lifestyle you so conveniently choose to live with? For instance, if you plan to retire and receive your Social Security payments at the age of 62, you will receive a third less amount of money than a person who begins his retirement at 66 years of age.
If you wait until you’re 70 to retire, you can double the payment you would get if you retired at 62. A retirement savings calculator can help a lot. If you feel it is unimportant to use such tools, you may want to see our article on its importance. When you have calculated your needs and the money you would need each year, deducting inflation, and you have that amount saved with you, you have the permission to retire!
Downsize Your Assets
After analyzing your current and future needs, you need to see if you really need some of the assets you currently own. If you are living in a large house and all your children have moved out, have you considered moving in to a smaller one? The mortgage payments will be lower and you can save more than that you were saving earlier with the bigger home.
If you and your partner have stopped working, do you really need two cars? You can move to cheaper areas. It was rational to live in a densely populated area with a lot of good schools nearby when your kids were growing up, but is it rational now? Have you considered moving to quieter areas of the city? Bottom-line: If it’s not good for your retirement savings, you need to downsize your assets.
Know Your Retirement Accounts
You need to be aware of the complexities associated with IRA and 401(k) accounts. The taxation laws vary and they could base your decision whether to choose such options or not. Also, you need to know the fact that if you withdraw from your traditional IRA account or the 401(k), your withdrawal becomes subject to income tax. The Roth IRA accounts do not come with this ‘perk’.
Work Part Time
You may need to work part time after retirement if you plan to live wisely and hassle-free. You can work as a volunteer in organizations that give some stipend. For more ideas on how to earn and save money after retirement, check our article on Best Money Savings Tips for Senior Citizens and How to Make Money in Retirement.
You should also start considering a sensible investment strategy as soon as possible. Go for a mix of stable returns through items such as index trackers and more high-reward strategies such as binary options trading to keep it interesting.
How to you plan to stretch your retirement savings? Are there any of other tips you could share with us and our readers? Please share your plans or experiences in the comments below.