For most people, successful retirement planning often requires decades of work. After all, building a nest egg that can support you and your family through your retirement years takes persistent effort and time.
However, the average American only has roughly $200,000 saved by retirement age, and many retirees fear outliving their nest egg.
Considering that the average life expectancy of most developed countries is estimated to rise in the coming decades, this fear is a rational one.
Thankfully, if you are approaching retirement age or have already retired, there are strategies that can help to make your money last a whole lot longer.
If you’re looking to extend the longevity of your nest egg, these six savvy tips are here to help.
1. Develop a Retirement Spending Plan
It is easy to assume that your spending will decrease during retirement. While this may be true for some, it is critical to have a detailed retirement spending plan in place to accurately forecast how your nest egg will hold up.
Some of the most important spending categories to consider are:
- Housing costs
- Medical expenses (research has estimated that the average person will spend at least $122,000 in medical expenses between the age of 70 and death)
- Travel and transportation
- Food and other daily necessities
Factoring in inflation, general living expenses, and other costs is also important. In other words, the more detailed and dynamic your retirement spending plan, the better prepared you’ll be.
If you want to boost your retirement savings, downsizing is one of the best lifestyle changes you can make.
Moving to a smaller house or becoming a single-car household are some larger changes that will help your wallet. However, even smaller acts can make a difference. From cutting out cable to eating out less, there are plenty of savings hacks that can help extend your retirement savings.
3. Keep Earning Money
It doesn’t matter if you choose to start a retirement side hustle or to remain invested with some of your nest egg, earning additional income is a great way to ensure you have enough money to retire comfortably.
Many retirees can make the mistake of being too conservative with their capital. Making changes to your investment portfolio or taking steps to recession proof your finances makes sense. However, retirees should resist the urge to divest completely or to be too conservative with their portfolio composition.
Along with making your money work for you, continuing to work until your full retirement age (FRA) or later and delaying Social Security, will benefit you greatly. The Social Security Administration views FRA as 66 to 67 years old depending upon the year you were born.
If someone with a FRA of 66, delays their benefits until then, their Social Security check will be increased by 8% for every year that they’ve delayed beyond age 62. At age 70, this increase maxes out at a 32% increase. If you are able, delaying your Social Security until 70 will be a great payout in the long-run.
4. Adopt Healthy Habits
I mentioned that the average person should expect to spend at least $122,000 in medical expenses from the age of 70 and onwards.
If you factor in other possible expenses such as long-term or assisted care, it is easy to see how health can be a major expense during retirement.
In order to truly make your money last during retirement, it is critical to invest in your own health. Spending money and time to make healthier choices will increase overall quality of life and greatly reduce the chance of various illnesses and disease.
From making healthier food choices to finding ways to remain active, never neglect your own health or the health of a partner.
5. Look for Easy Saving Opportunities
Having a comprehensive retirement budget in place is important to ensure your money lasts through retirement. Additionally, looking for simple, effective ways to save money whenever possible can also go a long way.
Small expenses can add up quite quickly if you leave them unchecked. Take time to review your cable, internet, and phone bills, and don’t be afraid to shop around for better rates. The same strategy can also work for insurance plans.
Similarly, shopping with a cash back credit card or finding ways to maximize travel rewards are easy ways to stretch the value of every dollar you spend. Taking advantage of senior discounts is also an easy money saving move.
6. Remember, Your Money is YOUR Money
Many retirees may find it tempting to help out their children, family, or even friends with various financial matters. While this can absolutely work for many people, it is also important to acknowledge that your nest egg is truly yours.
There is a difference between being charitable and being foolhardy with your money. If your acts of kindness risk the financial stability of your retirement, it might be worth taking a step back.
It may seem like a good idea to use your money to help a son or daughter with a major expense in their life, such as buying a car or a house. However, if the money doesn’t make sense for your budget, it isn’t the right decision. After all, if you jeopardize your financial wellbeing, it may only make the lives of the people you care about more stressful.
To Sum It Up
Ultimately, your retirement years should be an incredibly rewarding and enriching stage of life. In order to make the most of your retirement years, however, it is vital to protect the longevity of your nest egg.
Make a detailed budget, continue to earn income, and don’t be afraid to adopt some money saving hacks along the way. As long as you remain disciplined, you can increase the odds of making your money last through retirement and still maintain an enjoyable lifestyle for years to come.