Few people think about old age until they hit their late fifties. That’s when running out of money in retirement becomes a very real threat. Healthcare is becoming increasingly expensive, inflation is inevitable, and people are living longer due to better choices.
My 70-year-old client inspired me to write this post. He is scared of the inflation rate and worried that he might run out of money in the middle of retirement like his neighbors. What he didn’t know is that those unfortunate souls mismanaged their resources at one point. They either made big purchases, traveled a lot, or got a Ph.D. after retirement. There are no doubts about it, it is so important to manage your money carefully in the build-up to your retirement years. For instance, some people find that investing in shares and trading stocks can help them to boost their retirement income. Accordingly, if you would like to learn more about investing in stocks you can find a wide range of helpful resources online such as this Motley Fool review at Joywallet. Above all, when it comes to investing, you can never be too careful, and reading reviews is a great way to learn about some of the different trading platforms out there. This is something that I often discuss with my client.
Here’s the advice I gave him on how to outlive his retirement money.
Usually, retiring people live alone or with their spouses. Meaning, they don’t need that three-bedroom house anymore. Downsizing, or moving to one of the Retirement communities in Adelaide (or one in your area) would prove beneficial to the finances. Most of the space will always be empty and might even raise maintenance costs in the long run.
Downgrading to a smaller house means less cleaning space, affordable bills, and a happier life. Food and supplies might be a tricky thing to downgrade, but avoiding those unnecessarily overpriced brands could go a long way. However, that doesn’t mean you should take canned beans for dinner every day. Keep the budget on a reasonable level, and you should be fine.
I also advised him to ditch the truck for a smaller car because it is more expensive to run than a compact sedan. Think fuel costs, replacement parts, and insurance.
One of this client’s relatives passed at the age of 112. That means he has a pretty good chance of living to 100 years or more. At age 70, this man is looking better than most people I’ve seen, and he has little or no health issues for now. So, taking social security checks at this point would be a bad idea. I advised him to avoid the temptation until he really needed the money.
Taking retirement money too early impacts the money you get now and the in the future. You’re better off treating it as longevity insurance. Doing this guarantees you a smoother ride in your golden years.
A guaranteed passive income, however small, improves the quality of life in retirement. It can be an Airbnb property or a business you invested in a while back. Whatever you do, try to make enough money to cover the basic stuff such as rent, bills, and food.
In this case, my client owns a nice boat. So, I advised him to sign up for several boat-sharing services online. This opportunity will not be a completely passive income-generating idea, but it can get there with time.
He’s also on the last lap with the mortgage, which means he still needs to pay a few installments. The boat money will go towards the house payments. And, he is also considering renting out some rooms for extra cash.
A younger me would have wanted retirement at age fifty, but now I know better. Life happened, and I still have to pay for the house, plus a few other items I’ve not crossed off the bucket list. I also love helping people with finances, and it looks like I’ll be doing this for a long time.
Generally speaking, working beyond age 66 boosts your social security benefits. It is usually not that bad as you will be in a consulting position at this point. The last thing you’d want is to run out of money when approaching your 100th birthday.