Reaching retirement age is a milestone worth celebrating. For some, though, entering into retirement also comes with fears about the future. With life expectancy continuing to increase, along with inflation and being unsure of future costs or what kinds of returns to expect on savings, the potential of running out of money after retirement is a valid concern.
We suggest working with a financial planner to structure a distribution plan that will allow for sustainable cash flow during retirement. There are several ways to help stretch your money for as long as you may need it:
Lower Your Daily Living Expenses
Lower your must-have expenses, like utilities, house payments, debt, grocery bills, and entertainment, to make your money last longer. Depending on if you own your home outright or not, moving into a smaller home may lower your utility bills and your monthly house payment. Single, divorced, or widowed retirees may even consider living with a roommate to help reduce costs. Owning one less car can save an average of $8,500 per year.
Get a Part-Time Job
Working part-time after retirement offers opportunities for social engagement, stimulates brain activity, and encourages physical activity. It’s also a great way to supplement your income and make you less reliant on your savings.
Delay Taking Your Social Security
While it may be tempting to take your Social Security at age sixty-two, waiting until you’ve at least reached your full retirement age is advisable. Taking your Social Security too early will reduce your monthly benefit for the rest of your life. The longer you live, the more you’ll depend on your Social Security, especially if your savings run out.
We get it; not many people want to work longer than they have to. But consider this, working just an extra year longer than you anticipated will increase your Social Security benefits once you take it, and your retirement assets will have an additional year to grow. If working full time past your expected retirement age isn’t an option or a desire, think about transitioning to fewer hours or a role within your company with less responsibility.
Consider Long Term Healthcare
In this case, it’s better to be safe than to be sorry. Along with longer lifespans comes more chance that you or your spouse will experience chronic health problems and need long term care. This can put a significant strain on your financial resources. Long term health insurance can provide full coverage for a small annual fee. Timing is everything, though, in terms of qualifying for coverage. Over 50% of applicants 50-59 can get coverage; this number drops down to 24% at age 70.
Make Healthy Lifestyle Choices
Exercising and eating healthy may not seem to have any bearing on your finances, but along with many chronic health issues comes high healthcare costs. Engaging in healthy lifestyle choices can reduce your risk for conditions such as diabetes, hypertension, arthritis, and heart disease. Getting routine exams and screenings can also help reduce future healthcare costs.
Life throws us many curveballs. Don’t let running out of money in retirement be one of them. When you’re still living life at the ripe old age of 102, you’ll be happy you took the necessary steps to protect your wealth and your future.