8 Ways to Make Your Retirement Money Last: Complete Guide

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We take a look at ways you can make your money stretch in your retirement

Are you heading toward retirement? How do you plan to spend your free time?

Retirement lets you enjoy the twilight years of your life, away from the pressures of participating in the workforce. More than 100,000 Americans retire every working day, that’s more than 3.6-million people exiting each year.

Statistics show that more Americans are remaining at work for longer, with average retirement ages climbing from 60 to 62.

This increase over the last three decades is due to multiple factors, including advancements in medical care, lifestyle improvements, and financial pressures. Only 4-percent of employees believe they will have the financial resources to stop working before the age of 55.

More retirees are saying that they can’t afford to stop working, with 12-percent having part-time jobs that bring in supplemental income for their pension. Rising costs of living and high sales taxes in some states are eating into boomer’s retirement accounts.

If you’re planning on retiring soon, take a look through these eight ways to stretch your budget. By following a pragmatic financial plan, you’ll have more dollars left at the end of your retirement, than retirement left at the end of your dollars.

1. Work with a Financial Planner

The first step of the strategy begins before retirement. Working with a financial planner is an excellent way to ensure you have enough money available for your retirement. Statistics show that 7 in 10-Boomers that work with a financial advisor have a calculated retirement savings goal. Those boomers without advisors are more likely to run out of money in retirement.

Studies show that only 55-percent of boomers have any savings available for retirement.

Nearly 45-percent of the generation did have savings at one stage, but life circumstances caused early liquidation of their accounts.

Working with a financial planner allows you to structure your income and make room for a savings plan. Your advisor calculates your retirement savings goal according to your current lifestyle and then adjusts for inflation.

The financial planner makes recommendations for various financial products that can help you grow your money for retirement. Vehicles like 401(k) plans and IRAs provide you with tax breaks, and you get to meet your retirement goals faster.

If you have issues with your finances and have yet to start planning for retirement, consult with a licensed financial advisor. These individuals will help you fast-track your savings plan to meet your retirement goals.

Financial Advisors

Read: Guide to Financial Advisors: Everything You Need to Know

2. Budget Your Expenses

When you do eventually retire, you need to keep a close eye on your finances. Making mistakes with your money in your senior years is far more detrimental to your financial health than when you were younger. Young people have time to recover from a financial setback. They also don’t have to worry about the rising costs of Medicare in the prime of their life.

Seniors need to be much more careful with their expenses. One wrong move and you could end up losing your home and forced out onto the street. Developing a budget is the best way to track all the funds going in and out of your bank account. A comprehensive budget includes all of your cash flows and a detailed breakdown of all your expenses.

As a senior, you need to be intelligent with the way you spend your money. Spending your savings on lifestyle costs is burning money that you can’t afford to lose at this stage of your life. Avoid giving any loans to anyone, even family members. They may feel like it’s not a big deal if they delay their payment obligations to you. However, it makes a massive difference in your quality of life.

Too many seniors rely on social security programs to help them through their retirement years. Statistics show that 22-percent of married senior couples and 47-percent of widowed seniors rely solely on social security checks to account for 90-percent of their monthly expenses.

As of 2019, In 2015, the average monthly benefit from Social Security is $1,461, with 29-percent of seniors still having mortgage debt, and 27-percent having outstanding credit card debt. It may surprise you to learn that 3-percent of seniors still have outstanding student loans.

By calculating a budget, you get to stretch your money further by eliminating unnecessary expenses and prioritizing your debt payments.

How to Make a Budget

Read: How to Make a Budget: Complete Guide for Beginners

3. Plan Your IRA Distributions

A survey shows that only 18-percent of retirees say they are confident about having enough money to live on during the rest of their retirement. Those Americans that took a retirement plan before they retired are thanking their financial foresight. More than 80-percent of American companies offer contributions to a 401(k) plan for their employees.

However, only 80-percent of those employees choose to utilize the employers offer. Statistics show that companies with more than 500-employees have higher participation rates in the company’s retirement plans. Studies also show that the average balance in a 401(k) plan is $101,650, with the median balance being $31,396.

Most boomers and Gen X’ers that are retiring use traditional IRAs as a savings and investment vehicle. These fi9nancial vehicles require retirees to start making withdrawals from their account by the time they reach 70.5-years old.

While it’s nice to receive retirement payments, traditional IRAs require the individual to pay tax on any withdrawals. Those seniors still earning an income may find that the additional distributions from their IRS put them in a new tax bracket. This increase in taxation raises retirement costs and Medicare premiums.

Plan your distributions as lump sums to avoid paying extras taxes further down the line. Also, withdraw your funds as early as possible. You might have to pay more tax upfront, but the savings on taxes will be worth the early withdrawal.

What is an IRA

Read: What is an IRA? Complete Guide to Individual Retirement Accounts

4. Downsize Your Home

If your retirement account is starting to look thin, consider downsizing your home. Many seniors still live in the same house that they bought when raising their children. Living in a large house is a chore for seniors with cleaning and maintenance expenses. Most seniors finished paying their mortgage decades ago, and have 100-percent equity in their home.

In this case, you could consider downsizing to a smaller living space. Selling your home could yield a nice profit that allows you to live out your retirement years comfortably. A smaller condo or apartment is easier to maintain and manage, and it saves you on energy costs as well.

Another option is making use of a reverse mortgage facility with your bank. With a reverse mortgage, your bank pays you an agreed installment every month for a set period. After making the final installment, the bank has the title of your property, and you can choose to purchase it back if you wish. Most seniors make use of this service to pay their living costs and nursing home fees when they enter managed care.

5. Stay Out of Debt

Many seniors still have various forms of consumer debt, including credit cards, personal loans, and mortgages. The interest charged on these facilities eats into your retirement savings. It’s best to pay off your credit card in full at the end of every month to avoid high APR charged on this facility. If you still have anything left to pay on your mortgage, prioritize paying this debt as soon as possible.

Avoid taking on any new debt in your senior years. Try to lead a cash-based lifestyle wherever possible, and live within your means. Staying out of debt also means that you need to avoid making loans to any friends and family members as well. Some family members might think that you have a lump sum, and they can pay you back.

However, family loans rarely work out, and often they come with interest-free payments. Instead of loaning your money to family and friends, let it earn interest for you in a savings vehicle or asset.

6. Consider Taking Part-time Work to Increase Income

Retirees that are starting to run out of money may have to go back to work to increase their income. The older you get, the more challenging it is to go back to a job. Therefore. You need to try and identify a shortfall in your retirement savings as soon as possible. This strategy allows you to get back to work sooner before you start to lose your energy.

Some seniors may also choose to open a business or work part-time in a low-responsibility position. For instance, if you move to Florida for your retirement, you might want to open a bait and tackle shop. Those people that don’t want to run a business might get a part-time job as a caretaker or golf course groundskeeper.

Whatever you can do to produce income will benefit your retirement years, and help you avoid financial despair. Sitting around, worrying that you won’t have enough money to retire can cause the onset of high-anxiety that ruins your quality of life.

7. Take Advantage of Senior Discounts

There are hundreds of retailers that offer senior discounts. As a pensioner, you qualify for some money off your purchases at greengrocers, supermarkets, and clothing retailers. Most retailers offer a senior discount of around 5-percent on all purchases. In most cases, you’ll need to register for their senior discount program to activate your rewards.

While credit cards are a dangerous financial instrument, they work well if you pay off your outstanding balance each month. Most credit card companies also offer cashback rewards programs when you spend with your card. Banks are also willing to waiver account fees for most seniors as well.

These cashback credit rewards programs help you save a few hundred dollars on your shopping each year, providing you with some financial relief. Restaurants, movie theaters, and transportation companies offer senior discounts as well, allowing you to enjoy an evening out every once and a while.

8. Move to A Tax-Friendly State

Retirees need to consider if they are living in the right state for their retirement years. States vary on the amount of income and sales taxes they charge to residents. Some states, such as California and New York; have the highest income and sales taxes in the country.

As a senior, you’ll also need to take into account the costs of Medicare and managed care as well. States like New York, Ohio, and Atlanta have some of the highest medical costs for seniors anywhere in the United States. Sit down with your partner and research the best states for seniors to retire.

Our research shows that the northern states of Virginia and Wyoming, have the best quality of life for seniors, along with the lowest income and sales tax rates in the US. Louisiana, Alabama, and North Carolina are also excellent options where retirement dollars stretch further than in other states.

Avoid Florida, California, New York, Illinois, and Rhode Island, as these states have high taxes and Medicare costs. Some states have tax exemptions for seniors as well, so check online for a list of the best regions for retirees.

Moving may seem like an effort as you get older. However, changing states can be an exciting experience, and if it gives you a few more years of retirement bliss, then why not give it a try?

United States Retirement

Read: Which are the Best & Worst States to Live in for Retirement?

Wrapping Up – Key Takeaways

Everyone dreams of retiring on a sandy beach sipping mai-tais as someone waits on them hand and foot. The reality is that fewer Americans can afford to retire. Those that are living the retirement dream will have to deal with their retirement dollars running out faster than they expected.

There’s nothing more frightening to a senior than seeing their bank account starting to run dry. Don’t be one of those seniors that have to depend on social security; make sure that you have the foresight to plan your finances.

Rising consumer inflation and lower returns on investments mean that some seniors may have to make a plan about what to do with their finances in their senior years. By following these tips, you should be able to stretch your retirement dollars and make the most out of the twilight years of your life.


Oliver Dale is Editor-in-Chief of MoneyCheck and founder of Kooc Media Ltd, A UK-Based Online Publishing company. A Technology Entrepreneur with over 15 years of professional experience in Investing and UK Business.His writing has been quoted by Nasdaq, Dow Jones, Investopedia, The New Yorker, Forbes, Techcrunch & More.He built Money Check to bring the highest level of education about personal finance to the general public with clear and unbiased

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