Is Your Retirement Savings Enough? Here is How Low Income Families Can Make Money Last Longer.
It is important to make your retirement money last. Budgeting and extra side jobs are a couple ways to make that happen. We have a list of resources listed below that can increase your chances of being financially stable during your retirement, and most of them will help low income families make it through retirement.
After all, after many decades of hard work, contributing a fair share to Uncle Sam and saving for retirement, how do you visualize your retirement years? Do you want to live out your twilight years in a warm, sunny climate relaxing in a hammock, living in a small peaceful town or big city with public transit and rich cultural diversity? After all, it is called the "golden years," to relax, travel, spending time with loved ones and to pursue hobbies.
Retirement is a well-deserved reward that is earned from years of working and saving. But it is important to make your money last all through that timeframe, and it can be hard when living paycheck to paycheck. According to recent research, it is estimated that 52% of Americans think about retirement four or more times per week when triggered by stressful events like commute, heavy workload and long work hours.
Unfortunately, life becomes more expensive as you get older, with unexpected medical bills, your adult child(ren) may have financial problems, and supporting grandchildren. It is imperative, even more so for low income families, to save money, budget, and maybe even increase your income through side jobs.
The AARP reported that 11% of seniors have grandchildren living with them and 16% provided daycare services while parents go to work. Many of these are retired. The study found that 96% of seniors contributed to their grandchildren everyday living expenses, education cost, and healthcare cost.
For decades, grandparents have been acting as the "safety net for families," and it is difficult to balance those expenses without jeopardizing your retirement savings. All of that obviously comes with a cost, and that is but one more reason it is critical to budget and live within means during retirement.
Although there are many advantages of retiring such as stress reduction from working, more family involvement and receiving retirement income like social security benefits and pension, there are still over 25 million Americans, aged 60+ living below the federal poverty level. Seniors who are living paycheck to paycheck struggle with housing cost, lack of transportation, healthcare bills, food and for the most part, living mostly on social security benefit alone is difficult.
According to The Center for Retirement Research at Boston College, the average baby boomer has around $135,000 in retirement savings, which is equivalent to a monthly income of only $600, which is a low income. This is of course pre social security, but it is not much to live on. Budgeting, living with means, and living smartly are critical. Another idea to increase that $600 is to earn free money from passive income.
Why are baby boomers and lower income families unable to retire?
•The Great Recession: Baby boomers suffered during the recession. With job loss, declining house values and stock market loss, times were challenging. Many were unemployed and experienced financial hardship and were 'forced' to withdraw money from their savings.
•Barrier and Discrimination: Women were responsible for caregiving and were out of the labor for a long time. Today, many are facing financial difficulties as a result of spousal death, divorce, lack of skills and savings from being out of the workforce.
•Lower Social Security Payments - Low income families generally had lower paying jobs in their career. This means that their social security monthly payments will be lower as it is an income based program. The government retirement plan is often relied on, so that can be a challenge. Read more about what age to collect social security retirement benefits.
•Work Ethic: They entered into a company and work hard for several years with hopes of getting a promotion, salary increase, pension, and 401k. Baby boomers believe in working long term for a company, and in exchange, receive security and stability. However, the great recession distorted the economy, resulting in a decade of lost employment and very little job growth.
•Few Investments Options: Boomers were often too heavily invested in certificates of deposit and ordinary bonds. The older generation was conservative and not 'risky' enough while investing, which makes it difficult to retire on time.
•Business Opportunities: With the rise of the internet, it is a lot easier today to start a business.
Below are some suggestions to make your retirement savings last longer. Whether if you are approaching retirement age or a struggling retiree, these tips and strategies will help reduce old age poverty and to achieve financial stability during retirement.
Stay Longer In The Workforce
As simple as it sounds if you are in good health and if permitted by your employer/company, staying at your job longer will help you to earn a paycheck and increase your savings. In fact, your monthly payment will be 76 percent higher if you wait to start benefits at age 70 rather than earlier age.
Stay a few extra years in the workforce will allow you to improve your retirement security and increase your savings. With technology and medical advances, life expectancy in the United States has doubled to almost 80 years old. Nearly 35 percent of people age 65+ are still working full time, the highest rate since 1962. Older generations are now healthier, and they continue to work and stay longer in the workforce due to their insufficient finances, and there is a demand for qualified workers.
However, with the strong economy, boomers as well as “retirees” are likely to start businesses and skip the corporate burnout, layoffs and age discrimination in the workforce. This can be a great ways to make another paycheck. Unlike 20-something tech geniuses, boomers can use their decades of experience to contribute support and knowledge to the economy. And, it is also a great way to fulfill a dream by staying busy and doing something meaningful during retirement, while generating an income at the same time. Find jobs for retirees.
Reduce Lifestyle Expenses
Retirement often means living on a fixed income, which has to cover essential living expenses. Baby boomers can retire sooner and with more savings if they budget and if their cost of living is reduced.
Below are ways to cut expenses and budget during retirement. The tips are great for low income families and those living paycheck to paycheck.
•Paying off your mortgage: Housing expenses is one of the biggest expense in any household. Eliminating mortgage payments will make retirement more affordable. For extra income, you can list your guest room on Airbnb to generate an income, which can be used for property taxes and maintenance for your home. Refinancing your mortgage can potentially reduce your monthly payments as well.
•Prescription drugs – The cost of medications continue to increase at rapid rates, and retirees (like many others) struggle to buy them. Low income families have options, and find details on senior citizen prescription drug plan help.
•Relocating/Downside your home: If your children are independent and out of the house, there is no need for a good school district neighborhood or a several bedroom house. Consider downsizing to a smaller apartment/home and relocate to an affordable low-cost city where you can live comfortably on a fixed retirement income.
•Go carless or sell your vehicle: If you live in a walkable community with public transit, you can get rid of your car and save money on gas, insurance and maintenance cost. Find other ideas and make money from your car.
•Healthcare Cost: Save money on healthcare cost by purchasing a supplemental policy for Medicare to cover copayments, medications and other out-of-pocket medical costs.
•Senior Discounts: A major perks of growing older is qualifying for discounts and deals. People 50 and older are eligible to receive free admission passes to federal recreation sites, national parks, Amtrack discounts for traveling, cell phone plans, restaurant discounts, and many other perks.
•Using Coupons: Traditional coupons can be found on flyers, newspapers, websites (print at home) and magazines and they are a great way to save money in retirement. In addition to that, many coupon websites can help you to save money on purchases, travel, food, senior citizen medications and more. Find where to get free coupons.
•Reducing Debt: Eliminating debt is one of the best ways to save money on retirement. Consider joining the gig economy as a side hustle for extra cash to pay off credit cards, loans, and other debts.
It is becoming more challenging to “retire” these days, especially for lower to moderate income households. A combination of budgeting, saving money, and bringing in extra income can all help you have a successful retirement.