Stretching your Social Security and Pension Funds to make them Last
A large number of retirees are extremely concerned because they feel that their pension funds won’t be sufficient to last them for the rest of their lives – especially if current inflation trends are taken into consideration. However, there are a few steps you can take to ensure that your retirement funds will be able to last for as long as possible.
Consider Taking on Part-time Employment
If you’re still physically active and healthy, it might be worth considering taking a part-time job when you reach retirement age – instead of stopping work completely. This will not only help to reduce the amount of money that needs to be withdrawn from your retirement funds; it will allow you to keep busy for at least a few days a week as well – several older folk often find themselves becoming bored quickly when they stop working altogether.
Check Withdrawal Rates at Least Annually
Your withdrawal rates should be checked at least once a year to determine if you’re living off the interest from your retirement accounts or whether you’re dipping into the capital itself. If it’s discovered that you’re dipping into the capital, it’s a good idea to sit down with a financial advisor and see what can be done to preserve your fund. In most cases, it’s recommended that withdrawal rates don’t exceed 4% of the account’s balance over a 12-month period.
Examine your Budget
Unfortunately, not everyone will be able to continue working after reaching retirement age. If you will be one of the individuals who have to stop working, it’s crucial that you start examining your monthly budget and reducing expenses wherever reasonably possible.
Some of the quickest ways to reduce spending can include downsizing to one vehicle, moving into a smaller home or a property that’s in a more affordable part of town and even asking for senior discounts whenever making purchases – it never hurts to ask.
Avoid Taking on Debt
If you still have to pay for vehicle financing or cover the cost of credit card installments each month after retiring, your Social Security and pension benefits will not last nearly as long as they should – especially when taking the high interest rates that are charged on these payments into consideration as well.
Before you can even think about retiring, it’s crucial to ensure that all outstanding debts are repaid in full. This will allow you to free up funds to cover your essential expenses such as taxes, utilities, potential medical expenses, groceries and hopefully a few fun purchases along the way.
Preserving as much of your pension fund and Social Security benefit as possible by being reasonably frugal will allow you to rest assured that there will be enough money for you to live on once you’ve stopped working. If you would like to obtain a little guidance with regards to stretching your retirement funds as effectively as possible, get in touch with our professional advisors today.