When you’re in high school, you probably helped your parents in saving some money for your college education. After college, it’s your student loans that you will be saving up and paying for. Then, you’d have to save up for buying a car, a house, starting a family, getting your own kids to college and eventually, retirement.
If you’re at that stage in your life right now where retirement is looming, your number one concern would be lowered income. The good news is that your expenses will be reduced as well. In the following sections, we will help you figure out how much money you’d need to save for retirement in the first place, and how you can save money on daily expenses when you retire.
How Much Should Be Saved for Retirement in the First Place?
Let’s figure out how much money you would need to save up for retirement in the first place. When you go online, there are tools that can help you calculate how much you approximately need to save. Some of the factors considered are your age, whether you’re part of a retiring couple or not, your annual salary and your retirement goals.
These online tools should give you an idea about how much you should save, although it still heavily depends on what you would like to do during retirement.
If you started saving for your retirement in your thirties, that gives you plenty of leeways to accumulate funds and live comfortably during your golden age. The more that you put your retirement saving off, the more difficult it would be for you later on. Also, the amount that you actually have to save depends on what you would like to do during your retirement years.
If you picture yourself simply doing things that you did not have time for when you were busy raising a family, then you would simply need money for the basic expenses. On the other hand, if your goal is to travel the world or go on a state-wide tour of the US via motorhome with your spouse, you would need more funds than the average retiree. Remember that your needs and wants could change in the future.
If you are planning your retirement during your fifties and you simply decided to take care of the grand-kids, then you might slack off in saving for your retirement and think that you won’t need that much money, anyway.
However, once you reach your sixties and you see how much fun a fellow retiree is having living in a cottage house somewhere in the Caribbean or Asia Pacific, you might decide to follow suit. As such, it pays to plan your retirement in such a way that no matter what you end up doing, you will have sufficient funds to spend for it.
Ways to Save Money When You Retire
Now, what are the specific ways for you to save money when you retire? Take a look at the following list:
Boost your existing retirement money
For most retirees, the pension is their primary source of income. If you are very close to retiring but still have a few months or years left, how about boosting your pension income? Increase the monthly contributions by as much as your salary can afford. Talk to your employer or if you’re a business owner, check out what your options are for your company to match your extra contributions.
Another option is for you to delay that date by which you are starting to take your pension income. The longer that you’re paying a pension income, the bigger it becomes so you will have more funds to spend later on. You can also track down your personal or workplace pensions, claim your state pensions and other entitlements as a senior citizen from the government.
Consider working during retirement
This may not be as attractive an option for some but if you were only able to save for retirement during your late forties, you might not have enough to live comfortably during your golden years. To compensate, why not consider working during retirement?
If you do not have any health issues to deal with, anyway, working well over your retirement years is the best option to increase your retirement income. Of course, you have to make sure that you are working shorter hours and that you would not have to handle as much of the workload and deal with the daily stresses that you did when you were much younger.
Assess your current financial status and find out where your biggest assets are
If you see retirement looming over you, that’s the best time to assess your financial status. Find out what your biggest assets are. Review the performance of your savings and retirement accounts. Financial experts recommend that you keep a savings account that is worth three months of your spending money, although two or one month should be good enough. Make your money work hard for you, not the other way around.
Consider renting out or downsizing your home
Retirement is when all your kids have already moved out and you might be sitting at a goldmine of funds which is your home. By now, your mortgage would have already been paid off so your home could be your biggest asset. If you don’t want to move out, consider renting out half of your home for additional income.
The best option, however, is to sell and move into a smaller house or a retirement home. You won’t believe how much it actually costs to maintain a house that’s bigger than what an elderly couple needs to move around, so consider downsizing your home.
Downsize your modes of transportation
The number of cars that you have is yet another area that you can save on during retirement. If you have two, three or four cars, consider keeping only one car for your daily use.
If you live in a city where public transportation is easily accessible, you can also go for a carless option. The funds that you will accumulate after selling your extra vehicles can go towards your retirement fund. Also, you will realize a lot of savings now that you don’t have to spend as much on gas money and car maintenance costs.
Purchase long-term care insurance
People these days are living longer, more active lives as they grow old due to the advances in medical technology. If you get to live another twenty, thirty or even more years, consider purchasing long-term care insurance.
This is a specialized insurance plan which covers the costs of health care which extends beyond the typical hospital stay of a senior. This way, you would not have to touch your retirement money and have a separate investment for your health care costs during your retirement years.
Take advantage of senior discounts
During your first year as a senior, you might have hesitated in using senior citizen discounts. But once you realize how much money you can actually save by taking advantage of this benefit for retirees, it’s something that you would want to use immediately.
Senior citizens are given discounts to restaurants, movie theaters, car rental agencies, hotels, auto repair shops, etc. Even if the senior discount is not advertised, all you have to do is ask if yours can be applied. Most of the time, the proprietor of many business establishments will give you to honor of a senior discount.
During your senior years, you would also need plenty of activities to keep you occupied – but these can cost you money. The good news is that free and cheap entertainment, as well as social activities, are typically organized by local senior centers. There are some communities which even offer free use of the swimming pool, gym and other healthy lifestyle facilities to seniors.
Save on the most basic expenses
Not having to show up for work from nine to five will free up lots of your time, so you might think that you would have to spend lots of money to keep you occupied. But with a few techniques, you can actually save on the most basic living expenses.
Take your cable TV and magazine subscriptions as an example. When you cut back on these monthly expenses, that saves you a lot of dollars per year. But just because you are giving up your cable subscription does not mean that you cannot watch TV anymore.
Check out your online TV viewing options, or you may want to have an HDTV antenna installed in your home. Books and magazines can also be accessed through your local libraries.
Ditch the land line phone and downgrade your mobile phone subscription if you do not need as many minutes. For local trips, try biking or walking instead of driving to save money on gas while living a healthier lifestyle as well. Don’t spend money on fancy cappuccinos and brew a cup using your coffeemaker at home instead.
Just because your income will be reduced during retirement does not mean that you have to live like a pauper. By making sure that you have enough funds to spend during your senior years and applying these money saving tips, you can live a comfortable life during retirement without breaking the bank.