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3 Money Moves For People Who Don't Have Enough Saved For Retirement

By Christy Bieber – May 11, 2019 at 6:50AM

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These money moves could help your cash stretch further.

Far too many Americans have far too little saved for retirement. While young people still have time to get back on track by increasing the amount they save, older Americans and current retirees may have to settle for finding ways to live on less.

If you find yourself in a situation where your savings probably aren't going to stretch far enough to keep you comfortable during your senior years, it's important to act as quickly as you can to preserve the cash you have. And this can mean making some big changes. If you're not sure where to start when it comes to salvaging your retirement when you have too little saved, consider these three drastic moves you may want to make.

Couple looking at financial paperwork.

Image source: Getty Images.

1. Downsize to a smaller place

According to the Center for Retirement Research, Americans aged 60 and over -- across all income levels -- were more than three times as likely to still have mortgage debt in 2015 compared with in 1980. Bureau of Labor Statistics data also reveals housing as the largest monthly expense for many retirees. If you're living in an expensive home or an apartment with high rent, far too much of your meager savings could be taken up by your monthly housing bill. 

The good news is that if you're retired you typically have lots of flexibility when it comes to where you live. If you can move to a smaller place that costs you less, you should be able to slash your monthly housing costs. You may be able to get a home with no mortgage by downsizing, and perhaps even pocket some of the equity you had in your previous place and use it to bulk up your retirement investment accounts. If you're a renter, you won't get to keep equity, but you can still lower your monthly costs, which means having more cash to put to other things.

Moving to a smaller home could also mean you pay less for furniture, maintenance, property taxes, and utilities. And with less property to take care of, you'll have more freedom to travel or spend time on fun hobbies.

2. Move to a lower tax state

When you're living on an income that's too small, the last thing you need is a big tax bill each year.

Unfortunately, in some states you'll pay much more in taxes than others. Some states tax Social Security benefits under certain conditions. On the other hand, some states not only don't tax Social Security, but also allow you to collect pension income tax-free. And states with lower property tax, lower sales tax, or lower overall income tax rates could also be much less expensive for any senior, regardless of where your income comes from. 

Check out our guide to the most tax-friendly states for retirees to find out your ideal abode where your tax bill may be much lower than what you're currently paying today. 

3. Get rid of one (or both) of your cars

Cars are a huge household expense. The average new car loan was about $31,455 at the end of 2018, and a loan that big comes with an average monthly payment of about $523. A payment that big would take up close to 1/3 of the average monthly Social Security benefit. And that's just for loan costs. AAA estimates put the average total cost of vehicle ownership at $8,849 when factoring in depreciation, gas, maintenance, repairs, insurance, loan interest, and licensing or registration. In a two-car household, this would mean the annual cost of car ownership is almost $18,000. 

If you're moving to downsize or relocate to a lower tax state, look for a walkable area where you can get by with no car, or at least with one vehicle if you were previously a two-car household. If you're not moving and don't have a good public transportation system, you could also try sharing a car with your spouse so you can become a one-vehicle home. When you're not commuting to work every day, you may find you can make car-sharing work -- and could save a fortune by doing so. 

Drastic steps may be needed to save your retirement

While moving or getting rid of a car may seem drastic, taking these steps is far better than running out of money too quickly during your retirement. When you have too little saved and no time to grow your investment accounts, you should make big moves ASAP -- the more you draw down your savings accounts with expenses you can't really afford, the worse shape you'll be in in the future. By making big lifestyle changes, you can make sure you don't end up broke in your 70s or 80s. 

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