Retirement could end up being a more expensive prospect than you expect. You might think you'll get away with only spending half as much money as you did when you were working, but actually, most seniors end up needing about 70% to 80% of their former earnings to maintain the same standard of living.
A big reason for that boils down to having lots of time to fill. When you work, you stay busy for eight hours a day or more (assuming you work a typical full-time schedule). Once that job goes away, you'll need something to do -- and that something, whether it's golfing, traveling, or adopting a series of pets, could end up costing you a lot of money.
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That's why it's so important to enter retirement with a fair amount of money in savings. But what if your senior years are nearing and you've already missed that opportunity?
In that case, it definitely pays to consider extending your career a bit and boosting your 401(k) or IRA while you can. But if that still won't do the trick, there's one Social Security move it definitely pays to make.
Let a higher benefit make up for lower savings
The Social Security benefit you're entitled to during retirement hinges on your lifetime wages. And you can collect that benefit in full once you reach full retirement age, or FRA, which is either 66, 67, or somewhere in between.
But here's the cool thing about Social Security -- it will reward you generously for delaying your filing. For each year you hold off on taking Social Security past FRA, your benefits will grow 8%.
Once you turn 70, that incentive runs out. But if your FRA is 67 and you delay your filing until age 70, you can give your monthly benefits a permanent 24% boost. That's a great way to make up for any shortness in savings.
Of course, holding off on claiming Social Security until age 70 could also mean having to work until age 70. And that may not be ideal.
But one option you have is to see if you can shift over to part-time work. You may find that a partial paycheck does the trick in paying your bills while you wait on Social Security, especially if you do your best to maintain a frugal lifestyle during that time. Or you could potentially rely on your part-time paycheck and modest withdrawals from your retirement plan (even though, ideally, you'd be leaving your nest egg alone a bit longer in that situation).
Don't risk a shortfall
Many seniors are shocked to learn that retirement costs more than expected. If you know going into retirement that you don't have much in the way of savings, then it really pays to delay your Social Security filing as long as you can. Once you boost your benefits, you're guaranteed that higher monthly payday for life. And that's an important thing when you're going into retirement already lacking in funds.
