Aside from pursuing a career and building a family, retirement is one of the largest adult milestones that many spend decades preparing for in advance. As a matter of fact, as mentioned in our article entitled “How To Save For Retirement”, saving up for this milestone is a top priority for many people. This is why, aside from popular retirement plans like ROTH IRA, many look to alternative retirement savings options. These include signing up for brokerage accounts and investing in real estate.
However, while successfully saving up for retirement is perfectly doable, this doesn’t mean that this money will last forever. In fact, recent studies estimate that about 40% of current households where the head of the family is aged between 35 and 65 will run short of money during retirement. Furthermore, an NBC News report on retirees’ financial stress reveals troubling statistics.
Apparently, because of inflation, longer lifespans, and the lack of government support, the rate of unretirement continues to rise. Just last year, a single three-month period saw unretirement rates rise by a steady 0.1% every month. Fortunately, there are ways in which a retiree can rest assured that their hard-earned savings will not dwindle away. Here’s how:
Take up a part-time job
While working during retirement seems counter-productive, doing so can actually enhance this period. This is because working during retirement can not only increase a retiree’s income but also doubles as a way to keep them active and stimulated. To ensure that this job best fulfills a retiree’s unique needs and lifestyle, AskMoney’s guide to part-time jobs for retirees outlines the key to finding work that’s engaging without being too strenuous. A few examples of these are working as consultants, substitute teachers, or online sellers.
Since all these jobs require retirees to flex their skillset, it’s a great way to still engage your expertise and imagination. At the same time, because these are only part-time, you don’t have to worry about work becoming a consuming part of your life again. Best of all, since it’s part-time, you can easily adjust your responsibilities based on how much you want to add to your retirement savings.
Move to a state with a lower cost of living
Many retirees move to a different state in search of a more relaxed environment. As it turns out, though, moving can also make you more financially comfortable, too. Namely, this is because some states have significantly lower costs of living. This doesn’t mean that a state is cheap, but rather that prices for goods and services are more manageable.
As per Bankrate’s analysis of the best states for retirement, some of the best states for retirement are Georgia and Massachusetts. This is because they offer some of the most well-rounded factors including wellness, weather, culture, safety, and (most relevantly) affordability. These are especially important given that many retirees are looking to upsize rather than downsize their homes and lifestyles. As such, any retirees who choose to move to these states can get more bang for their buck.
Follow your annual required minimum withdrawals
Finally, those who have 401(k) plans and non-Roth individual retirement accounts can also make use of required minimum withdrawals (RMDs) to help them prolong their savings. These minimum withdrawals are from retirement accounts that start at age 72, and while they may first appear to be an annoyance, RMDs can actually help you stretch out your money. This is because RMDs are calculated based on a retiree’s own life expectancy every year. There’s a lot of math and careful consideration here, but essentially, agencies determine the older you are, the higher your RMD is.
According to financial analysts, this carefully determined amount is a good guide that you can use to plan your finances annually. At the same time, if you were to only pull out the amount indicated in the RMD per year, then it would ensure that your savings will last you for the rest of your life. This is because aside from life expectancy, agencies also ensure that the figure they set will be sustainable for your future needs. Thinking of your RMD as a guide rather than a burden can help you shape your healthy financial plan.
A retiree’s golden years are meant to be a time free of the stressful responsibilities that plague many working-age adults. But since finances are one obligation that never goes away, retirees can protect their quality of living by being agile and money-smart.