It’s really important you have enough money for retirement. The last thing anyone of us wants is for our money to run out during our retirement years. So, here are our top tips for ensuring your savings last through retirement.
Work longer before retiring
Within the last 15 years or so, many people have foregone the traditional retirement scenario of leisure and relaxation. Instead of traveling, volunteering, or spending time on the golf course, many people are continuing to work. Extending your working years can significantly impact financial security. You have the opportunity to bolster your retirement savings, delay tapping into retirement accounts and potentially increase Social Security benefits. This results in your retirement money lasting longer, mitigating the risk of running out of money in retirement.
The obvious benefit of taking this action is you’ll supplement your retirement savings. It will also afford you the opportunity to delay taking social security, which may (or may not) benefit you. Contact a financial advisor who can help you decide if delaying social security would benefit you based on your personal, financial situation.
So, our first tip is, if you have the ability and desire to extend your careers, working longer can be a strategic move to safeguard your financial future and ensure a more comfortable retirement.
Live within your means and reduce unnecessary expenses
Living within your means and trimming unnecessary expenses during retirement are essential if you want to ensure you don’t outlive your money. By tracking expenses, identifying areas where you can cut back, and distinguishing between needs and wants, you can create a more sustainable budget that supports your long-term financial well-being.
Whether it’s dining out less frequently, eliminating your twice a day Starbucks run or renegotiating subscription services, every small adjustment adds up over time. You will see that it adds up to a relatively large sum of money. This type of mindful spending empowers you to make intentional choices that align with your long-term financial goals.
Our second tip is by living within your means and reducing unnecessary expenses, you will be able to save, reduce stress and build a stronger financial foundation for your retirement years. In fact, most people can reduce ten percent of their expenses without impacting their standard of living.
Downsize your home
Consider living in a smaller home. Most of our children are out of the house by the time we retire so the big house is no longer necessary. By moving to a smaller home, you can significantly reduce mortgage payments, property taxes, insurance costs, and maintenance expenses. Moreover, downsizing allows you to unlock the equity tied up in your current home, providing additional funds for retirement, travel, or other financial goals.
You could even go a step further and leave Massachusetts. Many retirees are leaving states with high costs of living and choosing to live somewhere more affordable. This action will help your retirement money last. And if you head down South, you’ll have the added benefit of warmer weather!
Our third tip is that downsizing your home and moving to a more financial friendly location can be a liberating experience, offering both financial advantages and a newfound sense of freedom.
Adopt a healthier lifestyle
Our fourth tip probably isn’t something you’ve thought of before, but you should! Adopting a healthier lifestyle can be an important investment in your financial future, especially in retirement. By prioritizing physical well-being through regular exercise, nutritious eating habits and proactive healthcare, you can potentially mitigate healthcare costs and enjoy a higher quality of life in retirement.
A healthier lifestyle can lead to reduced medical expenses over the long term, including fewer doctor visits, medications and hospitalizations. Additionally, maintaining good health can delay the onset of age-related ailments, allowing you to remain active and independent for longer periods. This may also reduce the need for costly long-term care services.
By investing in your health today, you’re not only enhancing your overall well-being but also safeguarding your retirement nest egg for a more secure and fulfilling future.
Properly allocate your investment portfolio
Our fifth tip is to properly allocate your investment portfolio to achieve financial security while balancing risk and return. As retirees transition from the accumulation phase to the distribution phase, their investment strategy typically shifts towards more conservative options to protect their savings. But some become too conservative with their investments. Don’t fall into this trap. It’s important to become more conservative as you grow older, but don’t eliminate all risk. The goal is to maintain a diversified portfolio that provides a steady stream of income to cover living expenses while preserving capital and hedging against inflation.
You should regularly review your portfolio with your financial advisor so you can adjust the asset allocation based on changing financial needs, market conditions, and risk tolerance. If you carefully manage your investment portfolio, you can enjoy a reliable income stream and financial peace of mind throughout your retirement years.
Let compounding work on your behalf
Of all of our retirement savings tips, let’s discuss the best one of all. If you start tracking and cutting expenses, looking into downsizing and/or moving out of state, and living a healthier lifestyle before retirement, you’ll save even more. Why? The power of compounding comes into play. This remarkable force can significantly increase the growth of your investments over time.
Compounding refers to earning returns not only on your initial investment but also on the accumulated earnings from previous periods. The longer your money remains invested, the more pronounced the compounding effect becomes. Even modest contributions can snowball into substantial wealth over time, given enough time and patience. By keeping your money invested and not spending it on unnecessary expenses you are allowing the compounding effect to make your portfolio grow interrupted. Thus, you can unlock the full potential of compounding and achieve your financial goals faster than you might expect.
Conclusion
Ensuring your money lasts longer in retirement requires thoughtful planning, disciplined spending and strategic investment decisions. By adopting our retirement savings tips – working longer, living within your means, downsizing and prioritizing a healthier lifestyle, you can stretch your retirement savings further and enjoy a more secure financial future. Additionally, by properly allocating your investment portfolio and regularly reassessing your financial strategy together with professional guidance, you can safeguard your retirement nest egg and ensure your savings last through your retirement. Contact us if you want additional guidance on how to ensure you have enough money to last through your retirement.
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