Despite working hard and saving what they could, thousands of Americans every year retire without enough money to last the rest of their lives. This isn't always the result of poor planning. Some people can't afford to save that much during their working lives, and a health or family issue might force them to retire even if they'd prefer to keep working.
Retiring without enough money is stressful and turns what should be a relaxing, happy time in your life into a period of pinching pennies. It can also place a financial burden on your children if you need their financial support to make ends meet. You might never get yourself to a point where you're taking vacations and buying expensive items, but with some careful planning, you can still be able to live comfortably. Here are five tips if you're on the verge of retirement and strapped for cash.
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1. Try to get more money coming in
A part-time job could be a huge boon to your finances, especially if you're far short of what you'll need to last the rest of your life. This might not be an option if you're seriously ill or you have to care for a sick family member, but if you're capable, you should explore the possibility of working part-time.
Your current employer may permit you to transition to part-time work as you enter retirement, but more than likely, you'll have to find a different job. Think about when you're able to work, the skills you have, and try to find something that suits you.
Another option is to start a side hustle. You could rent out an extra room or property if you have one, sell handmade items, or get paid to watch neighborhood pets or children. Consider selling items you no longer use to add to your savings.
2. Move or downsize
Housing is most people's largest expense, so reducing your housing costs will go a long way toward shoring up your retirement savings. Downsizing is one option, but it isn't always the right decision. If housing costs have risen significantly in your area since you bought your current home, it could be cheaper to stay where you are than to buy a new place. Do the math first to make sure it'll actually save you money before you put your home on the market. Make sure to factor in any new mortgage expenses, including closing costs, as well as any repairs or upgrades you'd like to make to the home.
You could also consider moving to a more affordable area. This is a more extreme method but it might be worth it if you're not attached to your current home or city. Moving to a smaller town or a state that's more friendly to retirees could help stretch your savings.
3. See if you qualify for government assistance programs
Low-income seniors may qualify for government-run programs to help cover their housing, food, and healthcare costs. There might also be nonprofits in your area that could help you. Another option is Supplemental Security Income (SSI). This pays individuals $771 per month and couples $1,157 per month in 2019; in 2020, this will rise to $783 for an individual or $1,175 for a couple. You must be 65 or older, blind, or otherwise disabled in order to qualify. You must also have limited income and be a U.S. citizen and a resident of the U.S.
Check into the options available to you and take advantage of anything you qualify for. This can reduce the amount you must withdraw from savings to cover your expenses and let that money stay invested and growing for longer.
4. Create a budget
Once you've done the above steps, it's time to create a monthly budget. Focus on the basics first: housing, food, utilities, healthcare, and transportation. If you're still working, subtract your monthly income from this total to estimate how much you must withdraw from personal savings each month. Multiply this amount by 12 to figure out approximately how much you spend on the necessities in a year, and divide your total retirement savings by this amount to figure out how many years of savings you currently have. If you don't have enough to cover your basic expenses, try to work a little extra or bring some of your other costs down using the tips above.
If you have a little cash to spare, you can allocate a small portion for entertainment and items on your want list, but it's best to leave yourself a cushion in case you have an unexpected expense.
5. Talk with a financial adviser
A financial adviser might be your best hope if you've tried everything and you still can't seem to make ends meet. An adviser can provide tailored recommendations on how to invest your retirement savings effectively so your money grows more quickly, and give you a smart withdrawal strategy.
Make sure you're working with a fee-only financial adviser, and not one of those who earn commissions when you buy certain investments that they recommend -- this can tempt some of them into putting their financial interests ahead of your own.
Even if you follow the above steps, retirement might never be the carefree time you imagined. But you might be able to make it comfortable enough or at least ease the burden on your family members who are helping to support you.
