Most Americans have not managed to accumulate a sufficient amount of money to have an adequate retirement that covers all their economic needs, such as health, housing, food and other expenses. According to a recent Northwestern Mutual survey, the average American’s retirement savings are $1.37 million below what they think they would need to retire.
One might think that it is the youngest who have problems saving for retirement, since many have not even begun to plan for their future, either in the short or long term. However, the Baby Boomer generation, many of whom are already retired, have only about $120,300 in savings on average, but they think they would need about $990,000 to retire. What a difference of $870,000!
Many of these already retired Baby Boomers are almost completely dependent on monthly benefits provided by Social Security, and many of them have no additional income to supplement them.
What happens if you don’t have enough savings to retire in a dignified way and with all expenses covered? Well, there are strategies that can be applied whether retirement is near or if you are already enjoying these benefits.
Retirement Away From Home: Moving to a Place With an Affordable Cost of Living
One of the first strategies that a retiree should apply, if he understands that his current cost of living is not sustainable with the income that he is having or that he will have when he applies for Social Security benefits, is to reduce his cost of living, starting with housing.
There are many cases of retired individuals or couples who, after the departure of their older children, are left with a house that is now empty and too big for them. When they were children, they needed places to play, large rooms, a spacious dining room and a gigantic courtyard.
All that is no longer necessary, or it could be reduced to a housing adapted for the elderly, with less space to clean and maintain, less furniture to deal with and a much smaller patio, barely necessary. Moving to a smaller house will undoubtedly reduce the costs of housing maintenance, starting with taxes, which, as we know, vary depending on the size and value of the property.
There are several ways to make this housing reduction. If you are worried about moving beyond your county, you can try to find a smaller house in the same neighborhood or city to stay close to your family, if they live nearby. If you can’t move to a nearby city or state that has lower real estate taxes or, for example, doesn’t charge Social security taxes, remember that there are at least 10 states across the United States that still tax Social Security income. We have made a list that you can check here.
Many retirees even consider the most extreme possibility of moving to another country. Some have moved to places like Portugal, Costa Rica, Italy, among others, where the cost of living for a retired person is much lower, and they have access to good quality public health insurance and affordable housing.
Retirees Could Work Part-Time
Many retirees choose to stay active in the labor market by working part-time to supplement their income, since retirements and pensions are sometimes not enough to cover all expenses, especially if they have debts or want to maintain a certain lifestyle.
It is understandable that this behavior has both benefits and disadvantages for the retiree. Of course, the benefits include an additional income to maintain their standard of living and their health, while staying physically active and socially connected with other people.
And since it’s never too late to learn new things, keeping working helps them to develop professional skills and maintain good mental health, as well as good fine and gross mobility, which are essential aspects during the third age that should be taken care of.
Some employers offer special benefits for older adults, such as health insurance or discounts for part-time employees, which can be useful for retirees.
As for the disadvantages, there are several that should be considered, such as the possible impact on the amount of retirement depending on local laws and regulations, or the risk of falling into an imbalance between work and rest time. Because, come on, retirement is a time when you should enjoy leisure and time to share with yourself and others.