Improving Your Retirement Finances

Jeff Masters

Good News

 

Approaching the time in life when you hope to have enough savings and investments to retire can be challenging and confusing. But don’t be discouraged. It’s never too late to improve your retirement prospects. Here are some ideas and recommendations on how you can improve your retirement finances.

 

Downsize your living

Your family home is likely more space and a bigger expense than you need. If you downsize your standard of living, you can reduce your monthly expenses and save the difference. A less expensive place could reduce your tax, maintenance and utility bills. You may also be able to purchase a smaller property for cash, getting rid of that mortgage all together. Selling your larger home can also net you a lump sum of proceeds that you can put into your retirement portfolio and increase your nest egg. Downsizing is also a good opportunity to sell some of the stuff you have accumulated in the garage and extra rooms, and save the cash. Many of us have accumulated possessions clogging up the garage, attic or basement. Clear out those spaces and see what items you can sell. You can try a traditional garage sale or write up a description and sell it on Craigslist, eBay or another website.

Sometimes you can move to an area, city or region of the country that has much lower cost of living. You don’t need to live on the beach or golf course or pay for amenities or services you will not use. It may also be good to stay near family so you have mutual support.

 

Save like crazy

Now is the time to really be aggressive about reducing your expenses and saving as much as you can. Workers ages 50 and older can contribute up to $24,000 to a 401(k) in 2016. Your balance will grow even faster if you get a 401(k) match or other employer contributions to your account. You can in addition save up to $6500/yr per person into a Roth IRA (over age 50)*. The best way to do this is by making monthly contributions automatically.

 

Control all your expenses

It is time to do a complete audit of your expenses to see where you can get serious about cutting. While you can’t control your investment returns, you do have a measure of control over how much you are paying to invest. Know how much you are being charged, and shop around for lower cost plans for everything financial. Remember that financial institutions and financial representatives are in the business to make money off you and all your accounts and transactions.

 

Reverse mortgage

If you are 62 or older and want to remain in your home for the rest of your life, you may be able to tap some of your home equity for living expenses using a reverse mortgage. However, be aware that many reverse mortgages have high fees, your children likely won’t be able to inherit your house unless they repay the loan, and if you move to a new residence, the loan becomes due. Do your homework on this and get some good counsel.

 

Be frugal

Living cheap is not too hard, and using coupons and early bird specials doesn’t make you cheap. Your goal should to be frugal now, which may be a lifestyle change temporarily but a great long-term benefit. You may be able to retire sooner if you are willing to cut back your lifestyle to the basic necessities. You can cancel cable TV, ditch your expensive cell phone plan and give up expensive meals out. Familiarize yourself with the free entertainment options in your area, and get used to asking for a senior discount (many places that is over age 50).

 

Work longer

This may not be a choice for many people. Either they have to work to cover their expenses, or they are unable to work due to health issues. It is harder for many older individuals to get work, especially if they have been let go in a previous high paying job. You should know that working even one additional year gives your savings more time to grow and reduces the number of retirement years that savings needs to pay for. Delaying retirement can also qualify you for higher Social Security payments if you start benefits at an older age. Even a part-time job can allow you to withdraw less from your savings and give your assets extra time to grow.

 

Become an entrepreneur

People in their 60s and older often have the ideal combination of attributes to launch a business, including experience, an extensive social network and a working knowledge of the products or services people who work in your industry need. Just don’t invest money that you can’t afford to lose in a business. Use your skills & knowledge to apply to the marketplace to create a positive income stream.

 

Sharing economy

You can rent out a room in your home to vacationers looking for a unique and affordable place to stay or offer to taxi people to the airport in your car. A variety of online companies can help connect you to people who want these and other services you might be able to provide.

 

Consider the strategies for taking Social Security. There’s no one-size-fits-all. Every year after your Full Retirement age, your deferred SS benefit raises 8 percent. But, someone who has a life-threatening disease might not want to wait until 70 to take Social Security, and a person who is desperate for money may need to take it earlier than would be advised under different circumstances. You may want to work with someone who understands Social Security, or the Social Security website (ssa.gov).

 

Living within a budget and applying these recommendations will be a challenge, but there is a tremendous long term benefit. It is even kind of fun to discover new ways to save some money and reduce your expenses. What are you doing to improve your retirement finances?

 

*Contributions to a Roth IRA are limited to certain income restrictions by the IRS, check with your Tax Advisor

 

Jeffery Masters, President of Jeffery W. Masters & Associates 954-977-5150 Securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through Independent Financial Partners, a registered investment advisor. Independent Financial Partners and Jeffery W. Masters & Associates are separate entities’ from LPL Financial – Jeffery.Masters@LPL.com

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