I’m guessing you’re reading this article because you’re rapidly approaching retirement age feeling like you just aren’t quite there in terms of retirement savings. You’re not alone, that’s a situation many people find themselves in.
If you’re coming up a little short, then fear not because there are many ways to close the savings gap and find that missing money. Here’s 8 last minute strategies that could help boost your retirement income.
#1: Delay Retirement
So this might be an obvious strategy. However, think about it…every additional year you work is another year of earnings to add to savings and another year of living that savings doesn’t have to pay for. Additionally, delaying your retirement date could increase the monthly benefit you receive from both Social Security and your pension plan further adding to retirement income. Put all four of these factors together and the financial effect can be dramatic.
#2: Phased Retirement
Consider a second career. There are many social, emotional, and of course, economic benefits to continuing to work after retiring. The added income can go a long way toward lowering the savings burden required to make ends meet, and if you choose new work that you truly love you might even find it beats 30 years of endless free time. Look at your income gap and decide if there is a way to earn the missing money that would be rewarding and fulfilling for you.
#3: Low Cost Leisure
Golf and travel can be expensive or affordable depending on how you plan these activities. You could spend an entire summer touring Alaska in a car or camper for the same cost as a two-week cruise. You can golf or ski for an entire season on bargain senior passes for the same cost as a few days at a high end resort. You can travel full-time, year-round for less than it costs to live an ordinary lifestyle in some areas of the United States. Get creative and stretch those leisure dollars because recreational fun has little relationship to how much it costs.
#4: Eliminate Your Unnecessary Expenses
Do you really need that extra vehicle? Ditching a car will also cut your insurance and car maintenance bills. Eliminate all unnecessary expenses now. Consider cutting the purse strings on adult children that are out of school and not disabled. They should no longer be financially dependent on you after their education is complete. If your retirement budget is tight then there is no room for excess of any sort.
#5: Become Debt Free
Interest paid is money wasted. You should be collecting interest as a retiree – not paying it. Prepare for your retirement by paying off higher rate, non-deductible debts like credit cards and auto loans. Eliminating all debt is a simple strategy to lower your expenses without lowering lifestyle. Debt makes the banker rich – not you.
#6: Convert Your Home Equity to Savings
For many people approaching retirement, the equity in their home exceeds their retirement savings. Consider downsizing to convert a chunk of that equity into income producing savings. Scaling down to a smaller, lower maintenance, less expensive house creates a double-win because you increase investment income while simultaneously reducing or eliminating certain expenses such as mortgage payments, utilities costs, maintenance, property taxes, insurance and more – not to mention having less house to clean and care for.
#7: Convert Other Assets to Savings
The diamond ring from your ex-husband that you never wear, the mink fur coat from Grandma, the boat that was used once in the last two years, and other valuable assets that are seldom enjoyed can all be sold off to boost your savings. What valuables do you have that you really don’t need or use?
#8: Revisit Your Insurance Needs
As you prepare to exit the work force and enter retirement your insurance needs will change. Things like disability insurance and life insurance may no longer be relevant and could save you money if eliminated. In short, revisit your insurance needs to determine what is really necessary and appropriate. Your life is changing and so should your insurance coverage.
Implementing even one of these last minute strategies alone, depending on your personal situation, has the potential to increase your retirement savings. When you put them all together, however, they are a powerful set of tools that can substantially change your financial picture.
Retirement is something you worked your entire life for. As you enter the home-stretch now is the time to make proper preparations so you will enjoy it. These final working years offer a unique opportunity to prepare by considering issues that will make the transition as successful as possible.
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Desmond Henry is a fee-only CERTIFIED FINANCIAL PLANNER™ professional and founder of Afflora Financial Life Planning in Topeka, Kansas. He helps the retiring/retired plan their finances and invest their money. CLICK HERE to learn more.