Finance for Seniors: 10 Tips to Make Your Retirement Funds Go Further

A common concern for all of us is not having enough money to fully enjoy our retirement, especially as we grow closer, or even pass, the retirement threshold and take stock of our assets. While saving early is the best way to ensure a solid retirement, there are things you can do later on to make the funds you have go further. Here are the top 10 ways to make retirement savings last longer, no matter how much you have saved right now.

1. Review Your Budget

When you’re at retirement age, you still want to abide by a budget. Look for areas of excess spending and cut those expenses out. Dining out, gym memberships and frequent coffee runs are just a few things that eat away at your monthly budget. Many individuals are shocked at just how much they save by changing a few small habits. Consider this: an individual spends an average of $1,222 more each year by dining out.

Cutting back on small expenses doesn’t mean you need to cut them out entirely, just reduce them. Making dining out or getting a specialty coffee a treat you can enjoy instead of a daily or weekly occurrence.

You should also look over your bills to see if you can save in other ways. Check with your auto insurance provider if you’re eligible for any discounts. Compare prices between TV and internet service providers to get the best deal. Find small ways to save that will add up over time.

2. Lower Fixed Expenses

Retirement age is the perfect time to look at fixed expenses and develop strategies on how to drastically reduce them. For instance, retirement could present the opportunity to move into a space that’s the right size for you. You may not need the four-bedroom home you’ve lived in for the past 30 years. Instead, you could find a retirement community a better fit for your current lifestyle. A retirement community cost may be less and you’ll find distinct benefits, such as more opportunities for socialization and less home maintenance. Best of all, a retirement community price is typically all-inclusive and covers rent, utilities, maintenance and community activities.   

3. Consider Timing for Social Security

Your year of birth dictates when you’re able to access social security benefits. If born before the year 1938, you’re allowed to access full benefits by age 65. If born after 1938, your year of birth determines eligibility. Full retirement age for social security benefits now ranges between age 65 and 2 months and age 67. However, waiting up until age 70 to take advantage of social security will maximize the amount you receive every month. Don’t wait longer than age 70 since that has no impact on the benefit amount you’ll receive.

4. Lower Medical Costs

There are multiple health insurance programs available to reduce how much you spend on medical expenses. For instance, Medicare will cover certain medical bills, including hospital stays and physician visits. Hospital coverage is offered to everyone after the age of 65. The medical coverage is optional and has a low premium payment required.

Veterans are able to lower healthcare costs by enrolling in VA health care to access benefits. VA health care benefits cover any medical costs related to conditions that occurred while in service.

Medicaid is a federal health insurance program provided to those who meet certain income requirements. Medicaid fully covers most health expenses at no cost to you.

5. Make Healthy Choices

Protecting your health is an important step in protecting your wallet. A healthier lifestyle with a nutritious diet and regular exercise prevents medical conditions such as heart disease, high blood pressure, high cholesterol and diabetes. Attend regular checkups to confirm with your doctor that your health is in check. 

Staying healthy, or at least reducing health concerns, can significantly impact your retirement savings. Healthcare is one of the largest expenses for retirees, so staying healthy can help you reduce costs as well as allowing you to enjoy your retirement more.

6. Purchase an Immediate Annuity

Annuities require a relatively large upfront investment, but if you anticipate a long retirement, they can greatly improve your finances over time.

To make the most of your retirement money, consider buying an immediate annuity. The rules of an immediate annuity are much simpler than other types. An immediate annuity allows you to make a single lump sum payment in exchange for a permanent income stream for the rest of your life. Benefits of an immediate annuity include long-term financial stability and tax deferment advantages.

7. Utilize Catch Up Contributions

After the age of 50, many contribution limits are increased for IRAs and 401k plans. If you weren’t able to save as much as you’d like earlier and are still working now, you can play catch up and build funds. Traditional and Roth IRAs allow you to contribute $1,000 more annually if over age 50. For 401k plans, you can contribute $6,500 more per year after age 50.

8. Keep Stocks

One common mistake made by many people is to get rid of all their stocks when they turn 65. A basic rule of finance for seniors is to reevaluate your portfolio at retirement age. More and more people are living longer due to advances in health and technology. Investors recommend you have at least 50 percent of your investments in stocks at the start of your retirement. If you’re feeling conservative, lower that figure to 30 percent with the rest in fixed-rate investments. The further you get into your retirement, gradually switch over the stocks to bonds or cash.

9. Withdraw Retirement Funds at a Gradual Pace

Instead of withdrawing all your money at once, take out money at a gradual pace. Although your income and expenses determine how much money you need, aim to withdrawal no more than four percent from your retirement investment portfolio each year. For instance, if you have $200,000 in your portfolio, try to take out no more than $8,000 to cover living expenses.

If you were in a good position to plan and save earlier, you should have far more than $200,000 in your portfolio, which should allow you to withdraw more every year. If that isn’t the case, as for many Americans, simply do your best to withdraw funds gradually. Rely on social security benefits and other sources of income if you have them and minimize what you take out of your savings and investment accounts.

10. Look for Tax Breaks

Although you may have been an excellent saver through retirement, you could end up penalized for your good habits. Wealthy retirees are often put in a higher tax bracket and pay substantially more to the IRS. Your higher income at retirement may also put you at risk of being taxed for social security benefits. Medicare premiums are also designated by income.

This is where an excellent financial adviser can help. Ask an adviser if there are tax breaks that would help and if it would benefit you more to start making withdrawals on funds sooner than later. A professional can give you the best advice when it comes to taxes and making the most of your money.

Make the Most of Your Retirement Funds

Saving for retirement and making existing funds last longer is a common goal for many Americans. As you enter and move through retirement, it’s important to keep these tips in mind, as well as take other steps to improve your financial situation. Additional steps may include downsizing to a more affordable home or apartment and finding affordable supportive living options.

At Heritage of Sandy Plains, we provide one such option in our personal care and memory care community. Our personal and memory care neighborhoods are part of a warm and welcoming community located in beautiful Marietta, Georgia that provides help with daily activities for adults who want or need some support. In addition to our services, we provide a wide range of amenities and activities that keep residents engaged.

Our goal is to provide a comfortable home that empowers people to do more with their retirement, including their retirement funds. To make that possible, our retirement community pricing starts at just $3,400 per month. Contact us today to learn more about our pricing and how our community can help improve your retirement.