A 2018 study by Northwestern Mutual found that nearly two-thirds of Americans who have a plan to save money for retirement are certain theyâ€™ll outlive their savings. Moreover, one in five Americans (21 percent) have no retirement savings at all, and another 78 percent are concerned about not having enough money saved for the future. Here is how you can save money for retirement.
These statistics are worrying and something needs to be done. Saving for retirement means doing more than enrolling in a company 401k to ensure financial security during your golden years. It also means finding the freedom to enjoy your retirement, which is what actually makes those years golden.
If you havenâ€™t considered saving for life after work, now might be the best time to get started.
However, if youâ€™re already retired, proactive financial planning can help you save money right now. You donâ€™t have to spend the next three decades stressing out or worrying about running out of money at any moment. Here are eight ways to help you save money for retirement and guarantee it lasts as long as you do after retirement.
Minimize Your Fixed Expenses
One of the many ways you can save money for retirement is by minimizing essential expenses like shelter, transportation, insurance, debt payments and food. Owning two or three cars might have been necessary for your family before retirement. But, since youâ€™re no longer commuting to work, sell one of your cars.
Youâ€™ll make a little money in the short term, and it can save you on maintenance costs and monthly auto insurance payments long-term.
Downsizing your home may be a good option for you too. Chances are your children have grown and are no longer living with you, which means you need less space. A smaller home will also help you save money on utilities and repairs. Consider moving to a retirement community as well. This may bring some fun and new friendships into your life and simplify life after work.
Maximize Credit Card Points
Taking advantage of credit card points isnâ€™t only attractive for young professionals who travel a lot. It could be a great way for you to save money for retirement.
Imagine taking your 80-year-old parents on vacation to Europe or booking a luxury family trip to your dream destination. Hereâ€™s the best part. You get everyone to fly first-class using your points and miles, saving over $25,000 on flights. Yes, that happens more often than you think. And you can do it as well.
Simply sign up for the perks your credit card offers (cash backs, travel miles, points, etc.) and take advantage of them.
Always Ask About Senior Discounts
Whether youâ€™re visiting a national park, shopping for a new piece of furniture, or buying your favorite dish at a local restaurant, ask if there are any discounts for seniors available. Keeping track of all the stores that offer senior discounts can be daunting. So, make it a habit of asking for one. Youâ€™ve earned it, and it only takes a few seconds to ask.
Consider a Reverse Mortgage
A reverse mortgage is a type of loan that lets homeowners over the age of 62 borrow from their homeâ€™s equity and receive funds as structured monthly payments, lump sum, or line of credit. According to the CEO of All Reverse Mortgage, Michael Branson, if youâ€™re a retiree with considerable home equity and are looking to supplement your retirement income, a reverse mortgage might be ideal.
The entire loan balance becomes due when the last surviving borrower passes away, vacates the home permanently, or sells the home.
However, If your current home is unsuitable for aging in place (e.g., two stories, large yard with high maintenance or upkeep), you may also use a reverse mortgage to buy a new home. That lets you relocate and right-size into more senior active communities for a more enjoyable retirement.
Maximize Your Social Security Benefits
According to Social Security Administration data, 9 out of 10 elderly individuals receive social security benefits (theyâ€™re eligible at 62). Social security benefits represent around one-third of the income made by the elderly nationwide.
Among social security beneficiaries, 21% of married couples and about 45% of unmarried people rely on these benefits for 90% or more of their income.
Since so many see social security as their main source of retirement income, they often canâ€™t wait to take out benefits as soon as they reach retirement age. Itâ€™s important that you consider your longevity before making social security decisions. If you delay drawing on social security until youâ€™re 70, monthly payments will be 32 percent higher than what youâ€™d have received at your retirement age.
Have a Retirement Spending Plan
Truth be told, you need a guide that will help you track and monitor your spending and live within your means. And thatâ€™s exactly what a retirement savings plan does by putting you in control of your money.
Not having an appropriate spending plan as you save money for retirement can lead to overspending, which can become a threat to your financial well-being. The last thing you want is to run out of money while you still have many more years to live.
Be Smart About Investing
Itâ€™s not uncommon for retirees to leave their money lying in the bank due to a fear of investing. The truth is you may be losing money to inflation if you leave it in the bank. While itâ€™s not wise to make risky investments after retirement, you shouldnâ€™t shy away from a little bit of investing. Try investing a portion of your cash in stocks instead of letting it sit in a savings account.
Work Just a Little Longer to Save Money for Retirement
With so many part-time, remote, and freelance job opportunities available, you can take on a new role with more vacation time, flexible working conditions, or less responsibility. You really donâ€™t have to return to any previous roles.
Find a new role youâ€™re passionate about and keep working. Waiting a few extra years to retire can greatly increase your income, social security benefits, and retirement assets.
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