People are living longer, long enough to outlive their retirement savings. In fact, 51 percent of households are at risk of not having enough to maintain their standard of living in retirement. So what can you do to avoid running out of money in your golden years? According to US News, here are some ways you can reduce your retirement expenses and stretch your dollars over a longer period of time.
- Downsize. The kids are grown, you don’t really need a 4 bedroom, 3 bath house anymore. Think about selling and downsizing to a smaller house or condo, and add the profit to your retirement fund.
- Sell a vehicle. Now that you’re not working, you probably don’t need two modes of transportation. You’ll cut your insurance premium and the cost of maintenance.
- Take required minimum distributions. Avoid the tax penalty – a hefty 50% and income tax – take your annual withdrawals from your retirement accounts.
- Spend taxable accounts first. Minimize your tax bill by spending money outside of your retirement accounts first. Some gains outside retirement accounts are taxed each year. 401(k)’s and IRA’s aren’t taxed until you withdraw the money.
- Pay attention to investment and banking fees. Fees can reduce your return on investments. Look for investment options with lower expenses and fees. When it comes to banking, set up accounts to avoid ATM fees and overdraft charges.
- Avoid Medicare Premium Increase. You have a seven-month window, beginning three months before you turn 65 to fill out Medicare Part B application. If you miss that window, your premiums increase 10% for each 12 month period you don’t enroll.
- Research prescription drug plans. Medicare Part D prescription drug plans change yearly, so do your research on the out-of-pocket costs associated with each plan. For available plans in your area, visit www.medicare.gov.
- Delay Social Security payments. Don’t sign up for payments at the minimum age. Benefit payments are reduced by 20%-30% if you take early distribution instead of waiting until full retirement age.
- Move to a less expensive city. You now have the freedom to live where you want without worrying about making a living. Consider cities with a less expensive housing market and lower taxes. Some states exempt pension income from state income tax and some locations offer age-related property tax exemptions and deductions.
- Travel Smart. Take advantage of travel times during the week for better deals. Without a job to work around or school vacations, you don’t have to wait for weekends and holidays to get your travel fix.
- Don’t be too proud to ask for those senior discounts. It’s a rite of passage, and you earned it! Restaurants, hotels, movie theaters — you can find a senior discount just about anywhere, all you have to do is ask for it.
- Cancel your landline. With an abundance of friends-and-family mobile phone packages these days, there’s no reason to pay for a landline phone.
- Reduce your pay TV. If you have 350 channels available but you find you only watch 5 of those, you can save money by reducing your cable package, or getting rid of it all together and watch broadcast and online programs.
- Find free things to do. With lots of free time on your hands it’s easy to spend money on entertainment. But there’s no shortage of ways to fill your day – and they’re free or inexpensive. Consider volunteering at your local theater – you get see the performances free!
- Don’t overindulge the grandkids. It’s tempting, but resist the urge to drop a lot of cash on the grandkids. Instead of buying them a $50 video game, take them fishing or hiking in the park. You still get to enjoy them without draining your wallet.
- Cook more, eat out less. With all the free time you have, learn how to cook those gourmet meals you always wanted to try. There’s an abundance of on-line video cooking tutorials, not to mention, you can control the calories, and the cost.
- Shop for gently used. With craigslist, ebay and other online stores, slightly used consumer goods are a plenty. Check those sites, plus community bulletin boards, for used items before paying full price for something new.
- Compare price tags. If you have to buy new, do your homework. Check all of your local store ads and online deals the find the best price. Don’t underestimate the power of negotiation and haggling. Just because that’s the price marked, doesn’t mean they won’t take less.
- Pay off debt. The best time to eliminate your debt is before you leave the workforce. Set goals to pay off or reduce your mortgage, car payments and credit cards while you still have a stream of income.
Your Next Move can help you locate the perfect senior housing for your aging loved one. Our team of relocation specialists are also with you through every step of the transition process including home sale, downsizing, estate sales and moving household goods.
This blog post is brought to you by the team at Your Next Move. If you are interested in further information you may contact us below. LIKE us on Facebook and follow us on Twitter to get the most current communication on the subject of senior relocation. Please join our mailing list.
Your Next Move, Easing Your Senior Transition
Julie Kopetsky, President