When retirement approaches and the time you have to build your nest egg shrinks, it’s important to think about ways to maximize your savings. Here are some strategies to get the most out of your retirement savings.
Get Rid of Debt
It’s a good idea to get debt free to reduce your monthly costs and free up additional funds for things you want to do in retirement. Start by creating a plan to eliminate debt. But be careful with retirement funds. The idea is to pay off your debt without reducing your nest egg. Try looking for ways to make extra cash instead of drawing down your retirement accounts. Consider putting items you don’t need online, having a garage sale, or taking on a part-time job. Now that you are retired you can use free hours to improve your financial situation.
Make a New Budget
When you retire your monthly expenses will be different, so it’s important to adjust your budget to make sure you don’t go through your money too quickly. Make a list of all your current expenses and delete the ones that will go away when you retire. Next, add in the new costs you might have as a retiree, like travel costs. Now, make a new budget that takes into account the money you’ve saved and the estimated expenses you’ll incur in retirement each month. Give a budgeting app a go to make it easier to organize your expenses, track spending and adjust your budget whenever you need to.
Move to a Smaller House
The bigger your house, the more it costs to maintain and insure. Plus, property taxes typically cost more for larger homes. Now that you are getting ready to retire, chances are you don’t need to keep the big house that you raised a family in. Downsizing your house will reduce your monthly costs and you should net a profit from selling your larger, old home.
Move to a Less Expensive Area
To save money, consider moving to an area where housing costs and taxes are lower. Taxes on retirement income varies by state. Some states will tax most any type and amount of retirement income, but many states also have exemptions for retirement income, private pensions, public pensions, social security and distributions from retirement accounts such as 401(k)s and IRAs. Make sure to do some research on what states, towns and neighborhoods offer the least expensive options.
Take on Part-Time Work
Taking on part-time work in retirement is a great way to bring in more income, and reduce the amount you have to cover from your accounts. Working as a retiree will also keep you active, especially if you find a job that you will love doing. Many retirees also turn to “encore” careers, which allows them to put their skills to work as freelancers, consultants or in ways they did not previously consider. Just because you’re retired doesn’t mean you have to give up on working entirely!
Take Advantage of Discounts
As a senior citizen you have a wealth of discounts and specials to take advantage of. Hundreds of retailers will offer you lower prices on dining, shopping, dining, gym memberships, park and event admissions, airfare, hotels, car rentals, internet and more. Make sure to always check for senior rates whenever you shop, dine or travel.