Extending Your Savings
Extending savings is a priority for everyone nearing retirement age. Some people choose to work more years to build savings further and limit the amount of time they have to live off their savings. For other people, working longer may not be practical or desirable. The good news is that there are many great strategies for extending your savings that don’t require you to work more.
Practice living on a budget – The best way to see how far your savings can go is to practice living on a budget now. Take stock of how much you currently have in savings and how much you can expect at retirement age. Then talk with your financial advisor or use an online tool to determine a reasonable monthly budget for your postretirement years. Not only is this great practice, but your reduced budget will also help you stash away more savings. Aggressive budgeters and savers nearing retirement age may be able to save around 25 percent of their income to boost their nest egg as quickly as possible and gain the most practice.
Minimize your Social Security withdrawals – Another way to stretch your savings is to maximize what you get from Social Security. In order to do this, you should postpone collecting a check until your full retirement age. If you can wait until age 70, you will get the biggest check because your annual benefits will increase by 8 percent every year you postpone receiving benefits after you pass your full retirement age.
“People with smaller portfolios may be less inclined to wait because they fear decimating the savings they do have,” states Tara Siegel Bernard of the New York Times. “But delaying, even by a few years, may help maximize income over the long run. Married people (or those who have been married) are likely to have more options, since they have two work records to play with.”
Suspend your benefits as long as possible – Married couples may find the most profit by having the spouse who earns the most suspend benefits as long as possible. The spouse who earns less can collect benefits at full retirement age while the higher earner is still accruing benefits.
“The best approach is to delay the higher earner’s check until 70 and take the lower earner’s own benefits early,” states Siegel Bernard. “Since there are so many rules, the optimal strategy may not be obvious.”
This is why working with your financial advisor is the best way to maximize your savings and help them last as long as possible. Your advisor has experience working with many couples and with many income situations, so he or she will know how different strategies typically play out for people in similar situations.
Downsize your vehicle – Many empty-nesters and people nearing retirement age consider downsizing their homes, which can be a big boost to savings. It is a tough decision for many families, but there is an easier way that could also create big savings: downsizing your vehicle.
“A driver stuck with a gas-guzzling SUV might consider selling it and finding more fuel-efficient wheels,” according to Bloomberg Business. You can save on fuel and also on auto loan payments. High car payments are a frequent budget-buster, according to financial advisors.
Other ways to save – Other small ways to downsize that can add up quickly include quitting your premium cable plan in favor of fewer channels. Most people simply stick with the plan they have always had and don’t reevaluate until they move, but this can mean you are paying for services you don’t even want. Cutting back on your phone plan is a similar way to save. Take a look at how much data and minutes you actually use, and see if you can be accommodated by a less expensive plan.
Tracking your spending, budgeting, downsizing in small ways and working with a financial planner are all easily enacted strategies for expanding your savings now and extending it further into the future.
Published by Cumberland County Federal Credit Union
Includes copyrighted material of IMakeNews, Inc. and its suppliers.
Disclaimer – All content contained in this announcement is for informational purposes only and should not be relied upon to make any financial, accounting, tax, legal or other related decisions. Each person must consider his or her objectives, risk tolerances and level of comfort when making financial decisions and should consult a competent professional advisor prior to making any such decisions. Any opinions expressed through the content in this announcement are the opinions of the particular author only.
Categorized in: News & Announcements