We all know we need to save for retirement. But what if retirement comes sooner than we had planned due to a layoff or a health issue?
Another potential outcome is living longer than anticipated and not having enough funds to cover important necessities. According to a 2013 Allstate/National Journal Heartland Monitor poll, Americans are concerned about saving for long-term needs such as retirement.1. With this in mind, here is a list of tips to help those facing retirement with fewer savings than desired.2
Downsize. Some retirees may choose to downsize to save money and simplify lifestyle choices. For example, retirees may still live in the large family home they had when they were raising their children.
If the house payment, utilities or upkeep is sabotaging your budget, consider moving to a smaller, more manageable home. Have an extra vehicle? If you can, consider selling the extra vehicle and take advantage of carpooling or public transportation.
Cut Off Adult Children. If your kids are boomerang children who have moved back home or are regularly asking for loans, now might be the best time to confront them. Be honest about your plans to retire and let them know that while you love and support them, you have to take care of yourself.
Earn a Supplemental Income. Some retirees may choose to take a part-time job and may use the supplemental income to help pay for everyday expenses.
Speak with a Financial Planner. A financial planner is an excellent source of information. They will look into your specific financial situation and offer solutions and options to extend your retirement savings for as long as possible. Contact your local senior center to see if they can recommend a financial planner who has experience working with retirees.
Repay Social Security. If you are under 70 years old and have started to collect Social Security in the last 12 months, you may be able to repay Social Security and it will be like you never collected it. If you are relatively healthy and expect to live a long time, it may make sense to delay taking your Social Security benefits until you are 70.
According to Geoff Williams at U.S. News, “If you claim Social Security at age 62, you’ll receive 75 percent of your retirement benefits. Hold off until age 66, and you get 100 percent. But if you wait until age 70, you’ll receive 132 percent of your benefits. Every year you wait up until age 70, you’ll receive 8 percent more.1” Therefore, if you’re able to wait, this could mean a substantial increase in benefits that could have a significant impact on your retirement funds.
Consider a Reverse Mortgage. A reverse mortgage loan may be a good option for homeowners who are 62 or older who have either paid off their home completely, or who have significant equity in their home. Homeowners are still required to pay property taxes, homeowners insurance, utilities, and maintain the home.
Depending on the type of loan chosen, borrowers can receive their loan proceeds as a lump sum payment, monthly payments or as a line of credit. To learn more about reverse mortgage loans or to see if you qualify, contact a reverse mortgage lender near you today.