Many Americans are worried about how to finance their retirement. Are you worried about yours?
Fears about how to pay for retirement years are legitimate. The U.S. Social Security fund may not be able to pay all promised benefits to future retirees. Even if it does, the benefit may not be enough to live comfortably.
Bills.com suggests that retirees take these 8 steps to plan for the future:
- Do an honest evaluation. Comb through financial records to gain a real understanding of resources. What are or will be your Medicare benefits? Do you have long-term care insurance? What is the equity in your home? Do you own your car, and what is its condition? Do you have credit card or other debt?
- List goals. If finances are a problem, traveling around the world might be out of reach. However, retirees still can find enjoyment. Will you be content sitting at home after retirement? Will you need or want to work part-time? Do you want to spend time with grandchildren? Are you planning to pursue a hobby in depth? Plot out your goals and estimate the associated costs.
- Work longer. Nearly one-third of Americans work into their late 60s. If this option is a necessity for you, take heart in the fact that you are not alone.
- Eliminate debt.Debt is a tremendously crippling force. Strive to pay off debt before retirement or as soon as possible afterward. Make sure you understand all your debt relief options.
- Save, save, save. Even if it feels like it is too late, before you retire, save every penny you can. Baby boomers have, on average, less than $50,000 in retirement savings. Yet all Americans can contribute up to $15,500 annually to tax-deferred retirement plans. Individuals over age 50 can save $5,000 more in "catch-up" contributions. Get rid of any credit card debt and then pour any gift, inheritance, bonus, overtime or net from selling items into debt payment or retirement savings.
- Minimize expenses. Look closely at the bottom line and work to reduce costs. For example, a clotheshorse should realize that premium style may not be the No. 1 priority in retirement. Yet you can enjoy fashion -- and pinch pennies -- by shopping at consignment and thrift stores, or having a clothing swap with stylish friends. If you do not watch hundreds of premium TV channels, downgrade to a basic cable package. Instead of dining out, cook at home, host potlucks with friends or trade meals. Ask about senior discounts when shopping or going out.
- Consider alternatives. Brainstorm options. Be open-minded. Do you need a car? Can you share with others, use public transportation or move to a neighborhood where walking is feasible? Some seniors take roommates or purchase a new home with friends to cover costs as well as provide a social outlet. Others might sell a home and use the money to build an addition on a child's home, where the retiree can live safely and comfortably.
- Fill the gap. Would selling your home or applying for a reverse mortgage provide monthly income to pay the bills? Would a part-time job provide grocery money or some extra money for some fun activities?
The earlier you can evaluate your situation, the better. The sooner you minimize living costs, the longer your money will stretch.
Be honest with yourself and with your loved ones. Make the most of your resources and live your golden years to the fullest.