Americans have lesser retirement savings than their parents and grandparents did, according to research from Northwestern Mutual. In fact, 21 percent of retirees have no savings whatsoever. However, savings is essential to living a good-quality retirement. If you have not started saving or do not have enough savings, fret not! Below are some simple money-saving tips you can follow that will help make independent living affordable.
Delay Your Social Security Withdrawal
Those who are born after 1943 have an option that will allow them to draw additional Social Security. For each year you delay withdrawing your benefits after retirement, the benefits will grow by 8 percent until you become 70 years of age. In other words, you can save extra money automatically by simply delaying the withdrawal of your Social Security.
Those who plan on delaying the withdrawal of their Social Security might as well delay retirement also. Taking on part-time employment will give you a few years to earn and save the money you’ll need when you’re ready to settle down. Those who are good with their hands or who have computer skills can always find gigs that will pay them a reasonable wage.
Update Your IRA and 401K
Data from Investopedia reveals that after turning 70 and a half, you will no longer be allowed to make contributions to traditional IRAs (Individual Retirement Accounts). However, it is possible to still make contributions to your Roth IRA, so you’ll want to consider setting one up. Should you delay your retirement and return to the workforce, you can then dedicate a portion of your earnings to the 401K.
Use a Reverse Mortgage
Those who own property and maintain equity within it can use the reverse mortgage option. This is basically a loan which you’ll borrow against your home’s value. The funds can then be given to you either in a lump sum payment, monthly earnings, or credit line.
Cut Back Your Lifestyle or Consider Relocation
The cost of living in the United States continues to increase, with the East and West Coasts being the most expensive. One of the best ways to save is to downsize and cut back by changing your lifestyle and relocating to a different place. There is more to the USA than New York or Los Angeles, and the “flyover country” which has historically been overlooked is one of the most affordable places in the USA.
You also have the option of relocating overseas, but you’ll be in a foreign environment with a different language and customs, and gaining citizenship or legal residency in most countries will require you to go through many hurdles.
Reduce Your Debt
It is hard to save money if a large portion of your income is being dedicated to debt repayment. Those with excessive debt levels can schedule an appointment with a credit counseling firm, financial advisor, or even bankruptcy lawyer who can walk you through the available options. There are instances where people have qualified for various forms of debt relief and you might fall under this category.