As the cost of living and inflation both skyrocket many people nearing retirement worry that their “nest egg” won’t be enough to see them through. Millions of people unfortunately saw that, with a financial disaster like the one experienced in 2008, a person’s life savings can be devastated almost overnight.
Others have found out the hard way that the best laid plans for retirement can be completely destroyed by just a single health crisis.
That’s why today we’ve got the Top 5 Tips to help our readers extend their Retirement Savings and help them to last for a few years. Enjoy.
Tip 1 is, even if you’re healthy, to plan for extra healthcare costs. Statistically speaking, 2 out of 5 retirees will need some kind of long-term care or will experience some type of long-term disability, and both of these can quickly devour any retirement savings they might have, even if those savings are sizable.
Tip 2 is simple; down-size. Whether it’s a huge house with a huge mortgage and sizable maintenance costs or a state where taxes are ridiculously high, the best way to keep more of your savings for retirement is to sell that huge house that you just don’t need and live in a state where the government takes less of your money. Selling that the home and moving to a smaller one, even if it means in a new state, might not be the easiest way to save a lot of money in retirement, but it’s one of the best.
Tip 3 is to take taxes into account in everything you do with your money. If you can’t figure out the taxes on your own then sit down with a trusted financial advisor to do it, NOW. Many retirees pay much more in taxes than they have to simply because they don’t know the rules or don’t have their finances set up accordingly. If that’s you and your spouse, it’s definitely time to think about taxes and get them straightened out before you lose too much of your money to Uncle Sam’s greedy hands.
Tip 4 is not to wait until 70 ½ to start withdrawing money from your retirement accounts. Many retirees do this thinking that it’s best to avoid the taxes that withdrawals will force them to pay, but in many cases it only makes the problem worse. Most financial advisers say that 60 years old is a great time to start withdrawals, pay the taxes necessary and then put that money into a Roth IRA. It will sit there growing tax-free and, when you reach 70, the required minimum distributions are far less.
Our last tip, Tip 5, is to consider purchasing life insurance. This is especially true for a retiree who has marginal assets or will need to use a lot of their assets during retirement. Every individual is unique and there might be insurability issues of course but, when it’s appropriate and also when it’s possible, having life insurance can be a great planning tool, free up those assets and provide well for a surviving spouse.
Of course none of these tips takes into account the Best Tip of all which is to start saving for retirement as soon as you possibly can. The sooner you start the more you’ll have when you finally reach your “golden years” and the more time compound interest will have had to increase your savings substantially.