5 Summer Saving Tips to Sock Away Your Money

When you think about saving for retirement, it’s easy to focus on putting more money away and diversifying your investments or retirement funds. Another easy way to not only find more money for retirement, but to also get used to living on less, is to reduce your current spending and monthly bills. As always, you can stop buying that delicious latte every morning.

James C. Molet at Retirement Savvy runs an excellent feature called Living Frugally that provides excellent advice on cutting daily expenses, but let’s focus on some of the big-ticket expenses that are eating up your income and future retirement savings.

Downsize Your Cars

Do you really need the newest, fanciest model of your favorite automobile? Do you still need more than one vehicle? These are important questions to discuss with your spouse or partner as you approach retirement. In addition to monthly payments, running and maintaining a car can be expensive when you factor in gas, insurance, and other regular maintenance. If you still need to keep additional cars, you could trade in your car for an older and less expensive model, ending up with either no car payment or a significantly smaller one.

Insurance Policies

Depending on your situation, you may look at ways to lower insurance costs. You might consider updating your car insurance policies and homeowner’s insurance to lower deductible options. Many people self-insure against smaller losses to reduce their premiums and save hundreds of dollars annually. On the other hand, different insurance products can help you against unexpected life events or situations – which could otherwise be costly occurrences. For one, a life insurance policy can help protect your loved ones against the tragedy of a breadwinner passing away, leaving a tax-efficient means for replacing any lost income.

Also, let’s discuss some thoughts on health costs. You should also search out the most cost effective prescription drug plan to see if you can cut down on either premiums or your copays on prescriptions. On a similar note, while this won’t help to reduce your pre-retirement spending, you should make sure to sign up for Medicare on time. You can enroll up to three months before your 65th birthday. Enrollment is open for seven months. There is a 10% premium increase for each 12-month period of delayed enrollment.

Downsize Your Home

There is some debate whether it is a good idea to downsize your home. On one hand, you are living in a valuable asset that has increased in value since you purchased it. You could downsize and potentially end up in a home that costs less to run and insure. You might also benefit from lower property tax rates and not have to get a mortgage. On the other hand, if you don’t have a lot of equity built up in your home and live in an expensive area with high property tax brackets, you might not end up in a better situation.

If downsizing will work for you, think about moving to a less expensive location. Places like Florida, Arizona and Nevada are popular with retirees for a number of reasons, not least the lower costs of living in attractive and safe neighborhoods. These states also offer beautiful weather and plenty of opportunities to get out and enjoy the outdoors.

Also, if you keep cell phones and maintain a landline, consider getting rid of your landline. It’s redundant to pay for both. 

Scrutinize Your Financial Portfolio Fees

As you approach retirement you should be looking at ways to convert your investment and retirement portfolios to even more conservative, risk-adverse positions. While you’re doing this, review the fees that you are paying. Fees and expenses cut into your wealth and if you can transfer to options with lower associated fees, you will save money and increase your nest egg.

If you’re in your fifties and in the “retirement red zone” – the period of 5-10 years before your target retirement timeline – now it’s important to hold onto what you’ve saved. Consider looking into new strategies which offer means to preserve your wealth and can provide more income certainty when you retire. Depending on your situation, annuities can be used to bolster any gap between your projected retirement expenses and monthly income – or even used to generate income beyond what you’re getting from Social Security or maybe a pension.

Pay Off Your Debts

Making bigger payments to get rid of debts might sound counterintuitive when you are trying to cut expenses before retirement to try to live on less, but consider the alternative. While you are making bigger payments on your car, mortgage, or credit cards you will be reducing what you are living on today while also reducing your future expenses. A mortgage or other home equity loan is frequently the largest expense for any household. If you can enter retirement mortgage free, you will have more of your retirement income to cover your other expenses.

In your pre-retirement years, you are in a unique situation to calculate your expected retirement income and test drive that budget to see if it will actually work for you. Many people actually experience a decrease in their expenses when they no longer have to commute every day or wear expensive suits and professional clothing. If you are in your mid to late stages of retirement planning, try living on your projected budget. It may help you to identify other unnecessary expenses that you can either reduce or eliminate.

Over half of Americans over the age of 50 have not saved for retirement at all. If you’re reading this blog, you’re probably a member of the half who have saved something. When you are doing the math and working on your retirement income projections, don’t worry if the numbers don’t seem to be enough. Many people find it easier to save more and pad out their retirement nest eggs after the age of 50. After all, it’s when their kids are grown and out of the house, mortgages are paid off, and student loans can be a distant memory.

If you’re ready for personal guidance with your retirement income and financial goals, SafeMoney.com can help you. Visit our Locate a Licensed Advisor section to connect directly with a financial professional and request a no-obligation strategy session. And should you have any questions or need a referral, call us at 877.476.9723.