5 Things You Can Do When Your Retirement Savings Just Isn’t Enough

Experts tell us that our retirement goal should be a savings that totals 80% of our annual income for 30 years. For some of us, that’s over a million dollars!

Many issues get in the way of our ability to save that much. Sometimes we’re paying back student loans well into middle age, or we have unforeseen emergencies, or our employment isn’t consistent.  

We’ll receive a little income from social security, but most experts agree that it probably won’t be enough—especially if your vision of retirement includes travel and leisure. The average social security amount in 2017 was only $1460.

Without a healthy savings in place, your retirement may look a lot different than you expected.

Fortunately, if you haven’t been saving enough in a retirement account, there are other options available to help you increase your post-employment funds.  

 

1. Work Part-Time

Working after retirement is a reality for many people. According to the Bureau of Labor Statistics (BLS), in 2014, 40 percent of people ages 55 and older were working or looking for a job.

Whether it’s to earn a supplemental income or for fun, seniors are remaining in the workforce much longer—a trend that the US Department of Labor projects will increase.

You may not want work full-time after retirement, but there are plenty of part-time options. 

The BLS lists the following occupations as the most heavily populated by seniors:

• Curators, archivists and museum technicians

• Bus drivers

• Furniture finishers

• Proofreaders

• Medical transcriptionists

• Real estate brokers and agents

• Tax preparers

• Travel agents

Some other options for part-time employment include:

• Coaching and refereeing

• Classroom assistant

• Tour guide

• Usher/ ticket taker

• Library assistant

Additionally, the booming “gig economy” provides many opportunities to work as a freelancer or consultant. If you have a specialized skill in demand, this may be a great way to earn an income and keep a flexible work schedule. 

Pro-Tip

If you start working again after social security benefits kick in, you could risk a reduction in benefits if you earn over a designated income amount (in 2018 it was $17,040). Check with the Social Security Association for the most current information on work limitations post-retirement.

 

2. Get a Reverse Mortgage

If you’ve built a substantial amount of equity on your home, you may want to consider applying for a reverse mortgage. A reverse mortgage is a loan specifically for people who are 62 or older and who own property. For this loan, your property is used as collateral, and the equity you’ve accrued is converted into cash that you can take in a lump sum, in monthly installments, or as a line of credit. 

You continue paying property taxes and insurance after receiving the loan, and you must use part of the loan to pay off existing mortgage debt on the property first. You continue living on the property after the loan and aren’t required to pay lenders until six months after the last surviving homeowner moves out of the home or passes. The loan can be repaid by surviving heirs once the property is sold.

There are pros and cons to a reverse mortgage:

Pros

• No longer having to pay a mortgage will reduce monthly expenses.

• There are no income or credit score requirements to apply for this loan.

• HECM loans are insured by the Federal Housing Administration.

• There are federal regulations in place so that lenders cannot loan you more than the value of the property, and they cannot hold your heirs responsible if the home price falls.

Cons

• Not all lenders are reputable or reliable—you need to do your research so that you don’t fall victim to a scam.

• You reduce the amount of inheritance left to your heirs.

• Reverse mortgages often come with heavy interest and loan fees. 

For more information, visit the Federal Trade Commission and Housing

 

 and Urban Development (HUD) websites

 

3. Dip Into your Health Savings Account

A health savings account (or HSA) is a special savings account used to help people pay for health expenses when they have a high deductible insurance plan (a deductible of $1,400 for an individual and $2,800 for a family plan). People make pretax contributions to their HSA accounts each paycheck and then pull funds from the account when they need to pay for medical expenses. As long as the funds are used to cover approved medical expenses, they’re not taxed. 

HSAs are helpful in covering medical costs, but what many people don’t realize (or take advantage of) is that HSAs can also be an investment tool that you can use to pay for expenses in retirement. 

Here’s why:

• HSAs are tax-friendly
• HSAs have healthy contribution limits
• HSAs offer flexibility

4. Relocate

Ever wonder why Florida is considered the retirement capital of the United States? Sure, the abundant sunshine and arthritis-friendly weather are appealing to seniors, but that’s not the only draw. Florida has long been considered a great place to retire because of the moderate cost of living and low taxes. Florida’s great, but it doesn’t make the cut for most affordable places to retire. If you think you’ll be on a tight income when you stop working, consider AARPs list of 10 cheapest places to retire:

1. Birmingham, Ala

2. Detroit, Mi

3. Jackson, Miss

4. Memphis, Tenn

5. Toledo, Ohio

6. Brownsville, Texas

7. Augusta, Ga

8. Cleveland, Ohio

9. Akron, Ohio

10. Montgomery, Ala

If you crave an even bigger post-retirement change, you may want to consider joining the 500,000 retirees who live outside the United States. Many countries are far more affordable, have a strong community of retirees, and provide quality healthcare for seniors. Retired expats (people who move out of the United States) usually still receive social security benefits, but they are no longer eligible for Medicare.

According to International Living, Costa Rica is the most retirement-friendly foreign locale because of its low cost of living, affordable healthcare and, of course, breathtaking beaches. Here is the top 10 list: 

1. Costa Rica

2. Mexico

3. Panama

4. Ecuador

5. Malaysia

6. Colombia

7. Portugal

8. Nicaragua

9. Spain

10. Peru

5. Downsize

Another great way to free up some extra funds during your retirement years is to downsize. Downsizing may reduce your cost of living expenses, provide you with spending cash, and can minimize any clutter that has accumulated over time. Here are some ways to live more modestly and with more freedom from “stuff.”

Sell what you don’t use

If something has been sitting in your closet or attic for years and it doesn’t hold sentimental value, consider selling it. You can hold a garage sale or sell the items on Craigslist or Ebay.  

Get a smaller place

If you’re still paying mortgage on a larger home, think about moving into a smaller place in a less expensive neighborhood-- but only if it reduces your mortgage bill. 

Sell your wheels

If you own more than one vehicle, consider whether you really need that extra set of wheels. Selling your vehicle may reduce your debt and insurance payments and will free up some cash.

Create a better budget

Take a good look at the income you’ll be bringing in from your retirement funds and social security and see how well it covers your current expenses. Then, go through your expenses and find places where you can cut costs. Can you spend less on clothing or personal items? Are you eating out when you could be making food at home? Even small adjustments in your living expenses can make a big difference over time.