The importance of saving for retirement is no secret. Unfortunately, it’s not uncommon to lack the excess funds necessary to save, and before you know it, you’re well into your 60’s with no nest egg.
According to many estimates, you’ll need around 70 percent of your current income during retirement. This means that Social Security alone won’t be enough to pay your bills. If you are nearing retirement age with less money than you need to pay your bills and live comfortably, it can be quite stressful.
The good news is that you don’t have to panic. Financial stability is still a possibility, even if you have no savings. With a sound financial plan and a little discipline, you will be able to grow your retirement fund and get some sleep at night.
In this post, we will be discussing some of the strategies you can follow to increase your retirement savings and generate a stable income to retire in comfort.
Work Longer
Work longer and retire at a later date but make a solid plan with specific actions that will get you to retirement as fast as possible. Although this is an obvious strategy, it may be one of the most effective ones as long as you take the time to formulate and implement effective saving strategies.
Working longer can give you five to ten years of additional time to increase your savings account balance to secure a comfortable retirement. Consult with your financial advisor to formulate an investment strategy with risk and return levels that are acceptable to you.
By working a bit longer, you’ll also be able to hold off on filing for Social Security, which means that your monthly benefits increase significantly. If your full retirement age is, say, 67 and you don’t collect benefits until you are 70, you will be able to receive 124 percent of the amount that you were initially entitled to claim.
Retirement Savings
Get serious about increasing contributions to retirement savings. The fact that you are close to retiring doesn’t mean that you won’t be able to increase your savings account balance significantly. If you start putting away money every month from the age of 50, you’ll end up with more savings than you may think by the time you are 65.
You have to make an effort to live below your means to increase your contributions to your retirement savings. Saying goodbye to certain luxuries can be a challenge, but it is a requirement to reap the long-term benefits.
Draw up a budget and review your spending to reduce your monthly expenses. When you have a bird’s eye view over all your costs, you will find it easier to pinpoint excessive expenditures. You may also notice that you are spending a lot of money on things like magazine subscriptions that don’t provide you with any value.
After cutting out all the unnecessary expenses, you’ll likely find it much easier to contribute more to your retirement savings.
Work Part-Time
Work a part-time job after retirement in your hobby or area of interest. Monetizing the activities that you love to do during idle times can benefit you in several ways. It will allow you to do something that you like without running into financial issues.
The key to generating an income from your hobby is to conduct your activities in such a way that they add value to the life of a paying customer. For example, if you restore classic radios for your own collection, you could open an online store and sell them to other people or offer radio repair services to others.
You can also do work that you find interesting for someone else. The benefit of employment is that you won’t have to worry about the time, cost, and effort to start a venture from scratch.
Simplify Your Lifestyle
Get serious about minimizing or simplifying your lifestyle by reducing discretionary monthly expenditures after retirement which will reduce the cost of your retirement. In addition to downsizing your home, you can consider the following to streamline your budget:
- Using senior discounts whenever they are available
- Buying generic products instead of brand names
- Eliminate your car insurance bill by selling your car and using rideshare services
- Making simple home improvements to increase energy efficiency and reduce utility bills
Simplifying your lifestyle will not only save you a lot of money, but it will also free up a lot of time and eliminate the stress that is typically associated with clutter.
Look for Other Income Alternatives
As a retiree, you are in the position to derive income in several ways, especially since you have more time during the day than you had as a working person. Here are some examples of other income alternatives that you can consider:
Renting Out Space
If you have a room or flat on your property, you can rent it out on a monthly basis or by using platforms like Airbnb.
Sell Products Online
Starting an online store is easier than ever before. You can source products from supplier platforms or make them yourself.
Freelance Tutoring
Tutoring international students through virtual sessions is another way of earning income from the convenience of your home.
Contract Consulting
Now that you are retired, you can apply your skills and years of experience to generate an income with contract consulting.
In Conclusion
Many people go through their lives without giving a single thought to retirement planning. If you are one of those people, the prospect of retiring without enough savings can be daunting.
By thinking creatively and cutting down on excessive spending, however, you will be able to retire in comfort. Finding ways to generate an additional income can also keep you busy and prevent you from falling prey to boredom and idleness.
If you are still a few years away from retirement, start saving for retirement immediately. Downsizing and cutting out unnecessary expenses while taking steps to build additional sources of income will help you retire without fear of financial problems.