It's not uncommon for retirees to feel uncertain about whether they've saved enough, and it can be a valid concern. Without a regular working income, and with both regular expenses and unanticipated costs, retirement can be expensive. If you're worried about running out of money in retirement, or want to help prevent the risk proactively, here are some considerations to keep in mind.
Look for Ways to Cut Your Expenses
There are generally two ways to preserve your retirement savings: increase your money coming in and decrease your money going out. In some cases, the latter might actually be easier.
Look at your monthly bills and recent receipts to help better understand where your funds go. Are there areas where you could spend less? Here are some considerations that could potentially help reduce your spending without forcing a significant lifestyle change:
- Dining out: Use coupons, take advantage of early bird specials or go out for lunch instead of dinner. You could also simply cook more at home.
- Senior discounts: Many businesses offer senior discounts, including movie theaters, restaurants, museums, parks, drug stores, grocery stores and travel companies. Some are only for specific times or days of the week. Also, take advantage of free entertainment options, from concerts or plays in the park, to street fairs with entertainers.
- Housing: Not everyone wants to move during their retirement years. But some retirees like to live in states with no income tax, which could reduce expenses. Some move in with their kids or at least close by, and some downsize to a smaller house or apartment. In addition to potentially saving money, this sometimes eliminates yard work and home maintenance.
Put Together a Budget & Follow It
Planning out what you'll spend each month is a good way to help maintain a better grip on your finances as you approach or enter retirement. Consider breaking down expenses into categories like housing, utilities, groceries, insurance, transportation, travel and entertainment. However, before determining that budget, figure out what you're currently spending. If you don't know this information, try tracking your expenses for a month or two, and go through your bills in depth, including credit card bills. This may help give you a better idea of where you're starting and you may see some patterns.
Once you prepare your budget, track what you're actually spending each month so you understand what you need to do to help stay on track with your financial goals. There can be some comfort in sticking with a budget, as you may feel a sense of satisfaction just by living within your means.
Consider Going Back to Work
If you're worried about running out of money in retirement, you may want to find a part-time job that suits your skills and interests. The additional income can help with expenses and keep your mind active, too.
Think of opportunities beyond the job titles and roles you had previously. Consider some of your hobbies or passions and seek work in new areas. For instance, if you're handy and enjoy fixing up your house, you may like working at a hardware store. On the other hand, if you're a talented baker or cook, you may find satisfying work at a home goods retailer, bakery or restaurant. You could also go the entrepreneurial route and offer babysitting, house-sitting, freelance bookkeeping or administrative services. If you're able to continue your previous job, even at a new company or in a different capacity, that's another option.
Whether you're just planning ahead or you feel like your retirement savings are starting to run dry, there are some options and alternative routes to help you live more comfortably in retirement. However, you should keep in mind that if you're collecting Social Security, you will only be able to make a certain amount of income before your benefit is reduced. For more information, consider meeting with a financial representative to discuss the best plan to move forward.