This article was written exclusively for our Allpoint readers by our friend Hazel Bridges of Agingwellness.org. Thank you Hazel!
Retirement has its perks, but it also has its pitfalls. On one hand, you have more time available to pursue your dreams. On the other, you no longer have a steady income and have to live off your savings and Social Security. Fortunately, with a little financial tweaking, you can stretch your budget without giving up your newfound freedom or sacrificing your quality of life.
The two biggest expenses that most seniors face are healthcare and housing. Paying for these two basic needs can often cut into your budget, leaving you with very little cash to cover the things you want. However, it does not have to be that way. There are ways to restructure your situation to get the most out of your money.
Let’s look at healthcare. Fidelity Investments explains that as of 2019, the average senior couple will likely spend $285,000 on medical expenses. This does not include nursing or other long-term care. The first place to start when you want to cut your medical expenses is your Medicare plan. Original Medicare, although affordable at face value, doesn’t cover everything. There are a plethora of additional out-of-pocket costs that can add up at the end of the year.
Instead, plan to spend a few extra dollars per month on a Medicare Advantage plan. Many insurers, such as Anthem, offer Advantage plans that go well beyond the basics. Dental, hearing, vision, and some preventative wellness care benefits are often included in these alternative healthcare plans. You’ll also want to look into investing in long-term care insurance. It’s true that this is an additional monthly expenditure but one that can save you and your family hundreds of thousands of dollars if and when you are no longer able to live an active lifestyle.
Speaking of active lifestyles, if you value things like access to fitness facilities, socialization, and recreational opportunities, you may also save money by moving to a retirement community designed for seniors like you in mind. The Fairways Ironhorse is a boutique retirement club with luxury accommodations starting at $3,000 per month. This gives you access to gourmet dining, a dedicated concierge, and many other amenities. All of this plus well-appointed suites, underground parking, and plenty of entertainment, including live music and cooking classes.
Once you have your housing and healthcare taken care of, you’ll then want to look at the state of your savings. It is an unfortunate misconception that you have to liquidate all of your assets when you head into retirement. This is not necessarily true, and there are ways that your savings can continue to grow even when you begin to spend. Sensible Money explains that retirees have several options, including variable annuities with lifetime income riders, real estate investment trust, and tried and true government bonds.
Making big changes will impact your budget for the better. However, there are also small tweaks you can make to your spending habits that will help your retirement funds go even further. You might, for example, begin selling crafts, teaching golf lessons, or offering your business acumen on a freelance basis to supplement your income. Small cutbacks, such as skipping the diner in lieu of homemade meals and taking advantage of free activities, will also help you save money without negatively impacting your lifestyle.
Unless you are one of the lucky few who do not have to worry about money, you might have to make changes during retirement. Don’t be afraid of change — you never know what’s on the other side of your choices. What’s more, you might just find that small tweaks now will help you enjoy retirement in ways you never thought possible.