None of us know how long we are going to live. And, when you factor in variables like inflation, it is hard to say with precise accuracy how much money you will need when you retire. Fortunately, there are a few solid tips that will help you live comfortably, even if you reach the ripe old age of 100.
Start Saving NOW
Whether you are 25 or 55, the sooner you start saving for retirement the better. You may need to put aside money for living expenses, rising healthcare costs or to afford to move into a residential care unit. If you are younger, you can afford to just set aside a couple hundred dollars per month, but if you start at an older age, a larger chunk of your earnings must go to retirement if you want your twilight years to be your best years. This is because your money has less time to grow as you get older.
Do Not Rely on Social Security Alone
59 percent of retirees consider their monthly Social Security checks to be their main source of income. This is scary considering that the estimated average monthly income paid out by Social Security was $1,341 in 2016. Most of us would have a hard time living on that. And as the system is strained by the baby boomers retiring, relying on social security for your income will become a riskier plan.
Take Advantage of Employer Matching
As companies try to cut corners and drop employee benefits to help their bottom line, employer matching programs for 401(k) contributions are quickly becoming a thing of the past. However, if you are lucky enough to work for an organization that offers this benefit, take full advantage of it. This is perhaps the best way to save for retirement.
Use Strategic Systematic Withdrawals
Recommending strategic systematic withdrawals is basically another way of saying that you should keep your money working for you after you retire. Rather than withdrawing from all of your investments, figure out what your cash flow needs are and take out just enough to cover them. This way, the bulk of your money will continue to grow.
Leverage Your Home
Leveraging your home is at the bottom of this list because you may not want to do it. If you want to pass your home on to your children, then this option is not right for you. Otherwise, if you have a large house that feels empty and lonely, consider selling it or renting it out (with the help of a property management company), and move into something smaller and easier to maintain.