Showing posts with label how to save money for retirement. Show all posts
Showing posts with label how to save money for retirement. Show all posts

Wednesday, May 3, 2017

Short on Retirement Savings? - Find Solutions

How much money do you think you will need in order to retire comfortably?  The honest truth is you probably need more, much more, than you actually have.  According to, half of Baby Boomers, the generation which is currently retiring at a rate of 10,000 people a DAY, have saved less than $100,000.  Over one-third have saved less than $50,000.  This means a substantial number of Baby Boomers have not saved enough money to produce a modest retirement income, even when combined with their Social Security benefits, and they are at a serious risk of outliving their retirement savings.

Breakdown of Baby Boomer Savings

The report at showed the following statistics for Baby Boomers as of December, 2016:

37% - Saved less than $50,000
13% - Saved between $50,000 and $100,000
14% - Saved between $100,000 and $200,000
12% - Saved between $200,000 and $300,000
09% - Saved between $300,000 and $500,000
15% - Saved $500,000 or more

How Much Does the Average Retiree Spend?

According to the Bureau of Labor Statistics, the typical household whose head of house is age 65 or older spent $44,664 in 2015.  That cost-of-living has probably increased since that time.

How Much Income Can the Average Retiree Expect?

Social Security is designed to replace approximately 40% of an employee's pre-retirement income, although many Baby Boomers mistakenly believe it will replace 90% of their income, instead.  In 2017, the average single retired person collects $1,360 in Social Security benefits.  The average couple receives $2,260 in benefits.   This translates to an income of $27,120 a year for a retired couple, far below the $44,664 the average household spends.  At a 6 percent return, only the people who have saved $350,000 or more (less than one-fourth of retirees) will have enough savings to make up the difference between their income and the average cost-of-living for the typical retired couple.

To make matters worse, many certified financial planners recommend retirees withdraw no more than 4% of their retirement savings per year at the beginning of retirement, and increase that amount very gradually, in order to be confident they will not run out of money during the remainder of their lifetime. This means they would actually need to have $450,000 or more in savings in order to maintain an average lifestyle.  Unfortunately, the vast majority of retirees do not come close to having that amount of savings.

What to do if You Have Not Retired Yet

If you are getting close to retirement, but you have not stopped working yet, here are a few steps you can still take to deal with a shortage in your retirement savings.

1.  Start cutting your expenses now, while you are still working, so you can adjust to your future cost-of-living and, at the same time, free up more income for savings.  It is better to make small sacrifices now, if it means you will be more comfortable later in life.

2.  Increase the amount of money you have going into an IRA, 401(k) or 403(b).

3.  Postpone retirement until age 70, which could increase your Social Security benefits by approximately 24% over what you would receive if you begin to collect at age 67.  This action alone could substantially reduce the amount of savings you will need during retirement.

4.  Pay off all your bills, including your auto loans and mortgages, if possible, to minimize your expenses during retirement.

5.  Discuss your retirement plans with a certified financial planner to make sure your savings are invested appropriately to maximize your earnings and growth.

What to do if You Have Already Retired

If you have already retired and realize you are going through your savings much more quickly than you expected, you may want to see if you can find a part-time job and reduce the size of your savings withdrawals ... or even postpone making additional withdrawals until you are older and unable to work.  This is the best way to maintain your independence and salvage your savings after retirement.

Retirees who are falling short may also want to see if they can find a less expensive place to live, cheaper car to drive, or make other adjustments to cut their cost-of-living.

Finally, if you are concerned about outliving your money, you may want to talk to a financial planner to see if you can increase your income without using up the principal you have saved.

If you are interested in more ideas about preparing financially for retirement, where to retire, common medical problems, changing family relationships and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional helpful articles.

For an overview of retirement planning, watch for my book, Retirement Awareness, which is being published by Griffin Publishing and will be available in 2018.

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Thursday, April 12, 2012

Simplify Your Life for Retirement

As most of us approach retirement, we look forward to spending our free time doing all the things we have wanted to do for many years.  Now is the time when we can go to the beach, go fishing, spend time camping and hunting, write books, read books and enjoy all manner of relaxing pursuits.

However, if we want to make these things happen, one of the things most of us must consider is how to simplify our life.  We need to cut back on our expenses, and find ways to do the things we enjoy in the most affordable way possible.

This simplification can be a very empowering experience, as we learn ways to make life a little easier.  Below are some of the steps you may need to do before your retire, so that you can afford to relax once you stop working.

How to Simplify Your Life and Enjoy Your Retirement

Cut Your Housing Costs -- Can you move to a less expensive place?  Downsizing would not only save you money on mortgage and taxes, but also save you money on utilities.  Are there other housing costs that you can reduce?  For example, can you switch to a less expensive cable TV system; or use a Magic Jack rather than a traditional telephone line?  Look for all the ways you can cut your housing expenses to the bare minimum.

Consider Moving to a Retirement Community -- There are many reasons why moving to a retirement community could help you simplify your life.  Depending on the community, many of them have affordable housing, low cost or free entertainment, and a wide variety of ways to stay mentally and physically active.

Cut Other Costs -- Can you cut back on auto expenses, restaurant meals, cell phones bills, internet, etc?  Think of cost cutting as an adventure, and work together to find all the ways you can reduce your expenses.

Find Inexpensive Hobbies -- Whether you decide to stay in your current home or move to a retirement community, find hobbies that you can afford to enjoy. Whether you take up walking in your neighborhood, swim in the public pool in your community, see movies during low-cost matinees, join a book club, or take free classes, there are many activities available to senior citizens that are free or very low cost.

The Advantages of Simplifying your Life

When you cut your costs, you may find that you are also making your life easier in several ways.  For example, if you reduce the size of your residence, you will also need to spend less time cleaning and maintaining it. This alone will enable you to spend more time in leisure pursuits.

If you cut your expenses, you may find that you have less stress over your financial situation.  It may also enable you to retire a little sooner than you thought possible.

Don't wait until after you have quit your job.  Start simplifying your life as soon as you begin planning your retirement, so you have a realistic picture of how much money you need to live, and what it will take to really enjoy your post-retirement years.

If you are interested in learning about other ways to get the most out of your retirement, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles about financial planning, where to retire, health issues that can arise in retirement, changing family relationships and more.

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Sunday, January 1, 2012

Save Money in the Coming Year

What is your
New Years Resolution?
Back in 2010, the Washington Times reported the top New Years resolutions that were made that year.  The top 5 were: give up smoking, cut back on alcohol, exercise, lose weight, find a soul mate. 

While watching Dick Clark's "Rocking New Years Eve" on television in 2012, they listed the top New Years resolutions for that year.  They were very similar, with one notable difference.  The top resolution by the end of the recession was "Save Money".  This is not surprising, considering that many people are still struggling financially.  Many people, and not just Baby Boomers, are trying to learn how to reduce their expenses so they can survive on a lower income.

How to Save Money

However, the fact that saving money was not even on the list in 2010, and was number #1 in 2012, shows just how much our economy changed in a few years.  The AARP Magazine for December 2011/January 2012 addressed ways to save money in a short article called, "Boost Your Savings."

Here are some of the suggestions they had to help people who are having trouble making ends meet:

1.  Have a budget, and use it to decide whether or not you have any expenses that are no longer needed.  For example, if you no longer have any dependents, do you really need as much life insurance?

2.  Instead of cutting out things you enjoy, replace them with less expensive activities.  For example, if you enjoy eating out, share meals or find less expensive restaurants. 

3.  Find a less expensive place to live.  If you look through some of the other blog posts here at Baby-Boomer-Retirement, using the tabs or pull-down menu at the top of the page, you will see a large number of suggestions for affordable places to live on Social Security.   All of these posts list locations across the US where the housing is affordable and there are other amenities that appeal to retirees.  Since housing is the largest expense for most adults, finding a less expensive place to live is one of the best ways to save money.

4.  Finally, AARP recommends that Americans work until they are at least at their full retirement age of 66 or 67, and continue working until age 70 if that is possible.  These years of extra work will maximize the amount of Social Security you will receive.  If you can't keep working at your current job, see if you can find part-time work while you still have your health.  This can make a significant difference in your financial situation after retirement.

If you are looking for additional ideas for how to save money in retirement, where to retire, health issues, changing family situations and more, use the tabs or pull-down menu at the top of the page to find links to hundreds of additional articles.

With that goal in mind, please continue to follow,.

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Tuesday, October 4, 2011

How to Save Money for Retirement

Look for Sales and Save Money
Photo from

In cased you missed them, there were some very scary statistics scattered throughout the October, 2011 AARP Bulletin.  In the years since then, things have not changed much.  Basically, they come down to the fact that people are not saving nearly enough money in order to retire.  Here is some of what they had to say:

Families that have a head of household who is between the ages of 60 and 70 have only saved about 25% of what they will need for retirement.  (p. 3)

About 53% of all families in the US do not think they have enough retirement savings in order to have a comfortable retirement.  (p. 28)

In addition, the AARP Bulletin showed the impact that inflation is having on family wealth.  Between 1989 and 2009, the full time income for a man increased only about 3%.  Meanwhile, the cost of a college education for a child increased 73%, the cost of health insurance premiums rose 182%, and the amount of debt being carried by the average middle class family rose 292%!  (p. 28)  No wonder many of us feel that we are working harder than ever, but have less to show for it.

What can we do?  As impossible as it may seem, we all need to learn how to save money before we retire.  Everyone who is 50 years old or older should sit down and take a realistic look at how much income they will have when they retire, and then begin living now as close to that amount of money as possible! At the very least, you should try to live on only 90% of your income and save the other 10%.  If you cannot live on 90% of your income now, how do you think that you will live on just half of it ... which is what is going to have to millions of Baby Boomers!?

For example, let's say the head of the household in your home will receive approximately $2,000 a month from Social Security when they turn 67.  Their spouse will be eligible for an additional $1,000 a month in spousal benefits from Social Security when they turn 67, too.  If you expect to have $100,000 in your IRA or 401K by the time you retire, that could consider investing in a 20 year annuity and you would receive $400 - $500 dollars extra a month, at today's rates.  This comes to $3,500 a month in potential retirement income, including Social Security and investment income.

What is your current cost of living?  If you spend a lot more than $3,500 a month, you should start making adjustments to your current expenses to see if you can bring them down.  What will you need to change?  Will you need to move to a less expensive home or apartment, buy a less expensive car, or pay off your loans?  Perhaps you need to shop more carefully, by buying less and purchasing what you need when it is on sale. 

If you simply cannot bring down your expenses after retirement, is it possible that you could increase the amount of money you are putting in your IRA or 401K, so that you will have more retirement savings to invest when you stop working? Where can you come up with the extra savings? Are there services you could eliminate or reduce now, such as cable TV or your house telephone line?  Whatever you decide to do, start making the changes now, while you are still working.  The longer you wait, the more difficult it will be to take the necessary steps to have a balanced budget after you retire. 

With the right retirement planning, you can turn things around and take control of your retirement years.  It really is possible for you to become part of the 25% of people who have adequately planned and are prepared to retire!

If you are interested in more detailed information about retirement financial planning, where to retire, possible health issues you might encounter, family relationships and more, use the tabs or pull down menu at the top of the page to find links to hundreds of additional articles.

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