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The sad truth is that many Americans are vastly underprepared when it comes to retirement savings with a 2016 GoBankingRates survey revealing that 33% of Americans have nothing saved for retirement at all and, in total, 56% have less than $10,000 saved. [That begs the question] “How much money does it actually take to retire comfortably?” It seems like one million dollars is the magic number many people think of…but is it really necessary? Could some people could get by in retirement on less?…
The original article has been edited here for length (…) and clarity ([ ]) by munKNEE.com – A Site For Sore Eyes & Inquisitive Minds – to provide a fast & easy read.
Let’s explore all the different ways you could live a happy retirement even if you don’t amass a million-dollar nest egg.
1. Work part-time
If your nest egg won’t stretch far enough for all of your financial needs, a part-time job could help immensely. Not only can the extra income come in handy, but a few hours of work per week can have a positive effect on retirees’ mental health, as well as their sense of purpose and social life.
You can choose to work in the same field as you always have or launch a second career, maybe in a field you’ve always been curious about. Turning a hobby into a business could also be profitable, provided it doesn’t require a large financial investment to get off the ground. If you already have the skills and materials needed to get started, it can be a cost-effective and rewarding option to bring in extra income.
2. Wait to take Social Security
If you can live comfortably on your savings early in your retirement, most people should hold off on taking Social Security benefits for as long as they can. The Social Security Administration reports that if you delay receiving retirement benefits until after your full retirement age, your monthly benefit continues to increase. If you can wait until you’re 70 (the maximum age for waiting) you can get 132% of your expected payout. Unless your physical health or family history makes you think you will die before your late 70s, it usually makes sense to wait.
This strategy requires patience and frugality, and it may not work for retirees who need their benefits earlier to get by. Before taking this option, make sure you’ve got the financial means to wait, and that you have no other options for bringing in an alternative source of income. (See also: 6 Smart Ways to Boost Your Social Security Payout Before Retirement)
3. Reduce your housing costs
Housing is one of the largest expenses you’ll incur in life. If you can decrease this expense, you could live on a lot less in retirement. One way of doing this is to move into a smaller home or apartment. This could help you eliminate or drastically lower your mortgage payment, as well as minimize other housing costs like utilities, maintenance, and property taxes.
Another option is moving in with friends or family, if they are willing and able to take you in. Sharing a home is becoming increasingly common due to the rising costs of living for not only retirees, but for everyone else. If you don’t have friends or family you could bunk with, you could try to find a roommate that could help foot your housing bill. (See also: 6 Ways You Can Cut Costs Right Before You Retire)
4. Invest in a health savings account (HSA)
A health savings account is available to those who have a high deductible health care plan. You contribute pretax dollars into your HSA, and can use those same pretax dollars to cover qualified health care expenses — everything from hearing aids, to X-rays, to bandages.
The best part about this plan is that it can become a helpful part of your retirement savings when you turn 65. At this point, your HSA basically becomes a traditional IRA. You can withdraw the funds for anything — health care related or not — to help supplement your retirement income. Funds withdrawn for qualified medical expenses will continue to be tax-free, while nonmedical withdrawals will be taxed as ordinary income. (See also: How an HSA Could Help Your Retirement)
5. Consider relocating to a low-cost country
The number of American expats abroad is very surprising. The U.S. Department of State estimates that as many as 9 million citizens live overseas. There’s a reason so many Americans are choosing to live out their golden years abroad; moving to a country with a lower cost of living means that their retirement dollars are stretching a lot further.
In lower cost of living countries, you will see steep savings on housing, food, and even health care. Many people can also afford inexpensive help from locals to assist in tasks like cooking, cleaning, and running errands.
What’s more is that many of these countries have beachfront properties and communities that are affordable even for the non-millionaire retiree. Though you may be leaving friends and family behind, the good news is that they may be more likely to visit you if there’s a beach involved. (See also:
- 4 Affordable Retirement Spots With World-Class Health Care,
- Want To Retire In Europe? Here Are Some Of the Cheapest Cities,
- Best Places to Retire in Mexico
- 7 Smart Reasons to Retire Abroad
- 9 Retirement Hotspots That Are Cheaper Now Than Ever Before
- Anyone Can Afford to Retire in Mexico – Here’s Why
6. Invest in cash producing assets
If you don’t have one million dollars in cash, you might be able to make up the balance with other assets like real estate, stocks, or a small business. All of these assets have the potential to add another stream of income for you in retirement.
Real estate can be an excellent source of cash flow if you are able to charge rents that exceed expenses for your property. If you own dividend-yielding stocks, the income from dividend payouts can also boost your bottom line. Finally, if you have an interest in a business that is profitable, you could retire on less than $1 million with a moderate amount of monthly net income. (See also:
- 7 Reasons to Invest in Stocks Past Age 50
- 45 With No Savings? Embrace These 3 Basic Principles & Retire At 65 A Millionaire
Related Articles From the munKNEE Vault:
1. 7 Smart Reasons to Retire Abroad
If you’re caught in two minds about what sort of life you want when you wave goodbye to your work commitments, here are 7 reasons to retire abroad.
2. Want To Retire In Europe? Here Are Some Of the Cheapest Cities
If you’ve had your heart set on moving to Europe there are still history-steeped places there where you can experience old-world charm on a limited budget. Here are some of the cheapest cities you can settle down in across various European countries.
3. Best Places to Retire in Mexico
Here are the top 10 places to live and retire in Mexico and the reasons why:
4. 9 Retirement Hotspots That Are Cheaper Now Than Ever Before
Financial considerations are the biggest factor for many people when deciding where they want to enjoy their retirement years. As the strength of the dollar continues its hold against other currencies, it’s providing us with far more purchasing clout when it comes to buying other currencies. This in turn is helping to make many destinations even more affordable to U.S. citizens who are looking to decamp to foreign locales. Here are nine retirement hot spots that are cheaper than you thought.
5. Anyone Can Afford to Retire in Mexico – Here’s Why
If you’re worried you might be among the 96% of people who haven’t saved enough for retirement, moving to Mexico may be an effective way to make your nest egg go further. It has become the top choice for Americans, and Canadians too. Here’s why.
6. How Much Do I Need To Retire?
There are all sorts of rules of thumb about saving for retirement but, while they can be helpful as a baseline for setting expectations, you need to make a plan and monitor your progress as you age to be effective in the real world.
7. 7 Ways To Catch Up On Savings For Retirement
With longer life spans, inflation, and increasing health care costs, it’s possible that many retirees won’t have enough to comfortably sustain their retirements. Here are 7 smart moves will help you catch up on savings even late in the game.
America is facing a retirement crisis. It is a ticking time bomb and most people have their heads in the sand. The long and the short of it is that the older you get, you don’t spend less, you just spend differently – and more. The fun goes down and the healthcare costs go up.
9. 10 U.S. Cities With Great Weather for Retirees
Everyone’s interpretation of ideal weather isn’t the same – some want to spend their golden years soaking up the sun, while others prefer a place where they can be near ski slopes. That said, if you’re looking for what most of us would consider pleasant weather—places with plenty of sunshine, low amounts of rain or snow, fewest days below 32 degrees or above 90 degrees and low humidity—these locales came to mind as 10 of the best places [in the U.S.] to retire if weather is your main concern.
10. 45 With No Savings? Embrace These 3 Basic Principles & Retire At 65 A Millionaire
Are you way behind in saving for retirement, or haven’t started at all? Good news: There’s a way out of your predicament! Follow these three basic principles religiously and, along with a little luck, you still should be able to achieve your long-term financial goals.