10 Tips to Save Well for Retirement

Retirement can feel complicated, but a few small steps can make all the difference. It’s important to periodically review your financial plan while traveling towards retirement to ensure you take advantage of all the tools available. Your ability to save now will provide you with a nest egg to help you support yourself comfortably and live the way you want in retirement.

1. Evaluate How Much Income You Need

Having a goal in mind for how you want to retire is helpful so you can make the best decisions to save appropriately. Target a 70-90% income replacement rate with room to adjust based on your desired lifestyle. Consider using a retirement income calculator to adjust your investments as you age and revisit your retirement plan yearly with a basic retirement needs evaluation. If you don’t have a retirement plan, now’s the time to meet with a financial planner to create one and explore your retirement plan options.

2. Create a Personal Spending Plan

Spending plans help you avoid spending more than you have coming in and ensure your spending and goals are aligned. They can also free up extra money to pay down debt, such as maxing out a tax-advantaged account like an IRA, HSA, or 401(k). A great way to create a personal spending plan is to assess your current spending and decide how and if you will continue that way.

3. Review Your Retirement Accounts and Investment Portfolio

After saving money throughout your career, you have to decide how to handle those assets. Consolidating your retirement accounts into one account makes it easier to manage, reduces fees for investment management and account maintenance, provides a wider range of investment funds, and makes it easy to manage beneficiaries. However, consolidating can also lead to higher fees to maintain one large account, potential tax consequences, loss of grandfathered benefits, and limited investment options. Consult your financial planner.

Consider diversifying your retirement investments if you have 10-15% or more in one stock. You can do this through a balanced fund or target-date retirement fund. You should also allocate your investment portfolio appropriately between different asset classes, such as bonds, cash, stocks, and real estate.

4. Take Care of Debt

Debt is a key cause of reduced standards of living in retirement due to older adults often co-signing various milestone loans for their younger relatives. If you haven’t already, work on a plan to start taking care of any debt you have, so you won’t still have to pay it during retirement. You don’t want the money you saved up to live a worry-free lifestyle to have to go towards an ever-increasing debt!

5. Time Your Social Security

Many Americans receive guaranteed retirement income in the form of their Social Security benefits, pensions, or 401(k)s. Although you can start taking your Social Security benefits at 62, you might want to wait until you’re 66 when you’re at full retirement age or up to 70 for a higher lifetime benefit. Maximizing these benefits for as long as you can will go a long way in supporting you through retirement.

6. Consider Your Job

If you aren’t already contributing the maximum amount to your employer-sponsored retirement plan, then you should start. This allows you to take advantage of pre-tax contributions that can accumulate on a tax-deferred basis. Additionally, most employers will match your contributions up to a certain percentage. This further increases the sums in your retirement account.

Many people who are planning their retired life intend to keep working, but the likelihood of experiencing a health challenge goes up exponentially as we age. Explore working during retirement to choose a path that’s right for you and remember that whether or not you have a job, you’ll still have taxes for seniors to take care of.

7. Explore Your Health Insurance Options

Health-related costs add up over time and eat into your spending. Review your retiree medical insurance options, including Medicare and Medicaid, and the associated costs. You’ll also want to take advantage of your high-deductible health plan with an HSA option if you have it. This helps cover future medical care costs by setting aside up to $3,650 for individual coverage or $7,300 for family coverage in an HSA from pre-tax dollars. At 65, you become Medicare-eligible and must enroll within three months before and after your 65th birthday, or there may be penalties. If you’re considering various care options in senior living, explore how Medicare or Medicaid plans will cover you.

8. Prepare for Possible Long-term Care Expenses

You may be in great shape now and have plans to live entirely independently, but unexpected changes happen in life, and you might find that you need care in the future. It’s best to assume you’ll need some form of long-term care later in your life and plan for it, as it could affect where you live. You may evaluate moving closer to family or downsizing to put more money in savings.

9. Decide Where to Live and Other Important Wants and Needs

Where and how you decide to age will also affect how much you need to save for retirement. You could stay in your home, downsize, relocate, or move into a continuing care retirement community; there’s many options to consider based on your wants, needs, and affordability. It’s important to keep in mind how your home equity plays into your retirement plans. Choosing where you want to live during your retirement is just as much of a financial decision as it is a lifestyle one. People may want to move to a place with a lower cost of living as a strategy for saving more money in retirement.

10. Downsize as Much as Possible

As we age, home maintenance becomes a real hassle that takes up our time and energy and affects our health. It’s cost-effective to move somewhere with less space to care for and to have less stuff in general. A little bit of decluttering and downsizing every month of the year helps the process not feel so overwhelming, and you’ll make some money along the way to enjoy retirement! If moving to a smaller, more manageable place is the route for you, you’ll have to consider how to sell your home and then when to sell it.

Ready to turn your finances around and plan for the future? Check out our free ebook, 6 Money Planning Tips For Your Senior Living!

At Life Enriching Communities (LEC), we’re committed to ensuring patrons feel well-equipped to plan their future and age how they wish. Explore more resources on senior living or contact us today to learn more about our legacy of services and programs that bring meaning and purpose to every stage of life.