For a lot of people, the thought of retirement could be really daunting. The cost of living is always on the upswing and people may feel like there will not be enough cash to live on comfortably during their golden years.
Even if you’ve planned carefully and your retirement, nest egg is relatively hefty, there’s always a possibility that you’ll outlive or outspend your money. To stretch your savings through a long and vibrant retirement, read through these tips which are designed to save retirees a little (or a lot!) of cash.
#1. Buy longevity insurance
The concept isn’t new, but insurance companies have tweaked how these single premium annuities pay out to provide additional cash just when policy holders are likely to need it most. The money comes at a point in life when you’re likely to start having hefty medical bills combined with 20 years’ worth of inflation that may have diminished your resources.
This approach also makes long-term planning easier because the payout is determined when you buy the policy. You can confidently spend more of your other assets since you know they’ll be replenished at a pre-determined point. Although living a healthy lifestyle won’t guarantee avoidance of long-term health problems which are related to aging, prevention is the key to avoiding big medical expenses in the future.
If you take care of yourself, the benefits are not only restricted to saving money. You should be rewarded with a happier, more comfortable, and longer life!
#2. Delay taking Social Security
If you start receiving benefits at your full retirement age, you’ll get 100 percent of your monthly benefit. If you delay receiving retirement benefits until after your full retirement age, your social security check will continue to increase. For instance, if you wait until you’re 67, you’ll get 8 percent more for delaying benefits for 12 months. At age 70, the longest you can wait, you’ll get 35 percent more than you would have gotten at full retirement age and 83 percent more than you would have received if you’d taken Social Security at age 62, when it’s first available.
These percentages will differ slightly among recipients because working longer increases the amount they have paid into the system and those who earn more get more.
#3. Create a Retirement Plan
You will need to know how much money is needed in order to live in the manner that you wish to during retirement. It’s actually better to know about what you spend, as it will help you to focus your mind on what you need to save and how to go about saving it. So, create a monthly budget for retirement that is realistic. Include every expense, from housing to insurance to food, clothing and entertainment. Don’t forget about car payments, utilities and smart phones, cable TV and web connections.
It’s possible to come up with a life plan for retirement once you’ve crunched the numbers. For example, you may wish to sell a home and downsize, with a mind to accessing a lower monthly cost of living. By tracking your spending, identifying wasteful spending and creating a newer, tighter budget, you’ll be able to make sure that you develop better spending habits which will make your retirement funds go further.
#4. Consider long-term care insurance
The costs of nursing care or even assistance for living independently can be staggering. A recent government study showed that 40 percent of the people who turn 65 each year will spend some time in a nursing home, with the average nursing home costing around $60,000 a year. In a traditional long-term care, insurance policy, the company promises to pay a daily benefit to help cover the cost of long-term care.
#5. Downsize Your Living Space
If you’re paying more for your house, condo or apartment than you need to, you should cut these expenses and go for a smaller and less high maintenance home. Mortgage and rent payments are probably among the biggest ticket items on your monthly budget and living with less space, for less money each month, might be the fastest and simplest way to come up with savings for retirement.
Most people anticipate downsizing when they retire, but it may be smarter to do it years beforehand and then pocket the money that is saved, which may then be added to investments or to a retirement savings account.