Sometimes life gets in the way of retirement savings. You or a family member got sick. The market tanked at exactly the wrong time. You lost your job and haven’t been able to get back on track. Now you’re at the age you’d thought you could retire at, but won’t be able to nearly as much of the stuff you dreamed about. That doesn’t mean you need to give up. There’s always something you can do to improve your circumstances. I don’t have any magic formulas to give you the riches you dreamed about, but here are a few ideas to make the most of your retirement years.
First it’s important to make sure you know where you currently stand financially. It’s most important to have a budget and understand your current expenses. You also need to add up all of your assets: that includes money in the bank, in CDs, in work retirement plans (remember to check for old ones!), in IRAs, annuities, income from real estate or other income streams, and your expected social security benefit. Compare your expenses to your expected income. Is there a gap between them? If so, you need to either increase your income or decrease expenses. There’s the magic formula!
The largest budget category for Americans (according to a 2014 BLS Survey) was housing and it is by far the largest accounting for right around one-third of the entire budget. The best way to reduce this is to pay off your home before retirement. Even if the house isn’t paid for, another cost cutting measure is to consider downsizing. If you own a home worth $200,000 and you downsized to a $135,000 home you can add $65,000 to your retirement savings and/or free up some money in your monthly budget because a smaller home is usually less expensive to maintain.
Another option is to keep working. This doesn’t mean you need to stay at the same old job and if you take social security before full retirement age you need to be aware that your income could impact your benefit. Try to find what Chris Hogan calls an “encore career”. Consider working as a contractor, sell crafts on Etsy, become a bartender, or give music lessons. Think outside the box and consider things you may not have been able to before. Think about work-life balance, your commute, hours you’ll work, and health insurance benefits.
Use discounts! Always ask. Every time. We all know about buffets and cheaper movie theater tickets for older folks, but other services give discounts too. Ask phone carriers, cable companies, airlines, and places like that too. Every little bit helps!
If you’re panicked that you have less in your retirement funds than you wanted, talk to a financial advisor about your options. We can help you build a good plan based on your personal situation and don’t have account minimum requirements.