When it comes to your retirement dreams, the possibilities are limitless. Do you want to spend your golden years traveling? Volunteering? Spending time with family? Taking up a new hobby? Crossing some goals off your bucket list probably sounds exciting! No matter what your ideal retirement looks like, you can be sure it will be expensive. But don’t fret—there are steps you can take now to actively reduce the amount of money you’ll need in retirement. Let’s discuss four ways to prepare for a more affordable retirement.
1. Pay Off Your Mortgage
Your mortgage may be your largest recurring expense in retirement. Getting rid of this payment before you enter your golden years can significantly reduce the amount of money you need each month.
Start by calculating how much extra money you could throw toward your principal. Could you make one extra payment every few months? What about one extra payment a year?
If there’s not a lot of wiggle room in your monthly budget, consider cutting down on discretionary expenses or earmark any extra money you get from bonuses or tax refunds for your mortgage. Every little bit counts.
An alternative strategy is to minimize your monthly payments by refinancing at today’s historically low rates. If you can secure a fixed-rate mortgage at an interest rate barely above the rate of inflation, it may be fine to pay it off slowly even if your monthly payments persist into retirement.
2. Downsize Or Relocate
If you’re still living in the same house where you raised your family, there’s a good chance you don’t need all that space. Downsizing may seem extreme, but it’s a quick way to reduce your long-term retirement costs, lower utility bills, and pay off debt. Plus, a one-story house with a smaller yard may be easier to keep up as you age.
If you’re not tied down to your current city, take it a step further by relocating to an area with a lower cost of living. You might be surprised by how much further you can stretch your retirement dollars. For example, a $1 million nest egg lasts around 13 years in California, but 23 years in Mississippi. (1)
3. Travel During The Off-Season
Ask 50 people what they plan on doing in retirement, and most of them will say travel. Whether it’s traveling across the country to visit the grandkids or traveling to see the Eiffel Tower, it’s on everyone’s list—and for good reason. After working 30+ years, you deserve to go to all those places you’ve been dreaming about.
If you want to stretch your travel budget, consider traveling during the off-season. It has many perks. Not only are airlines, hotels, and activities cheaper, but you beat the crowds too! Plus, you have extra money left over to jump-start your next trip.
4. Delay Social Security
The average life expectancy is 84.3 for men and 86.6 for women. If your health and family history indicate that you may live this long (or longer), delaying Social Security until age 70 could be highly beneficial in retirement.
For example, the chart below shows how much your monthly Social Security payout would be if your estimated payment was $2,000 at full retirement age (66) and if you claimed benefits at ages 62 and 70.*
If you start collecting benefits at this age…
your monthly payout will be this much…
62 (reduced benefits)
66 (full benefits)
70 (increased benefits)
*Assuming a full retirement age of 66
By waiting until age 70 to claim your Social Security benefits, you would earn $1,140 more per month than if you claim your benefits at age 62.
How We Help You Prepare For A Secure Retirement
As you can see, there’s more than just one way to prepare for a more affordable retirement! And remember that you don’t need to start this journey alone. We at Fiduciary Wealth Management would love to be your guide to help make sure that after you stop working,you have sufficient income to live comfortably. In fact, we’re passionate about helping you live your ideal life in retirement after a career spent serving others.
Everyone’s circumstances are unique, so there’s no one-size-fits-all strategy to implement. We invite you to book a no-obligation conversation with a financial professional so we can discuss your current situation and put you on the path to a secure retirement. To get started, schedule a phone call now!
About Rocklin Senavinin, CFP®
With over 20 years of experience in the financial planning industry, Roc has dedicated his career to helping individuals live comfortably in retirement and enjoy the assets they have spent their career building. He is co-founder of Fiduciary Wealth Management, a fee-only registered investment advisory firm in Little Rock, Arkansas. As a CERTIFIED FINANCIAL PLANNER™ professional, he has advanced training in the holistic process of creating a personal financial plan that addresses a person’s comprehensive needs for the short and long term. To learn more, connect with Roc on LinkedIn or visit www.fidwm.com. If you have questions, feel free to schedule a phone call using this link.
The views expressed represent the opinions of Fiduciary Wealth Management, LLC and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial, or legal advice or service to any person.
Additional information about Fiduciary Wealth Management, LLC is also available on the SEC’s website at https://www.adviserinfo.sec.gov/Firm/284324. Please call or email with questions.