22 retirement hacks to make your savings last longer
05 October 2016
Retirement hacks
The odds of living longer are greater than ever, which is great news, but it also means your money needs to live for longer too. Here are some brilliant hacks to get the most out of your retirement savings.
Find out how much you will need to retire
Before you can plan your retirement properly, try to figure out just how much you need to retire on. There are plenty of pension calculators online that can help you to find out just how much you need, such as calculator.net (US) and Aviva retirement planner (UK).
Map out your financial future
Once you’ve got an idea of how much you need to retire on, mapping out your financial future is key. Spend some time working out what you will need to live on, and how much you would like to be able to spend on other things. If you don’t feel confident managing savings yourself, it might be worth visiting a financial planner.
Max out employer benefits
Work for as long as you feel you can. This is particularly important if your employer offers you a good retirement plan. Make the most out of this; match the contributions your employer is putting in and aim to receive these benefits for as long as possible – it will make a huge difference to the quality of your retirement.
Try a practice retirement first
Although you may feel like you’ve got a retirement plan that’s fit for the long haul, it’s not always the case. Ease yourself into retirement by starting to try out your new lifestyle a couple of years before you quit your job. If you are thinking of moving to the coast, for example, try going for extended trips so you can see how much it would actually cost to live there.
Time your career exit on your terms
As you would expect, working longer helps you to build up more savings for retirement, as well as helping you to accrue a larger social security benefit/state pension. But don’t count on your job lasting forever. You may find yourself wanting to leave work earlier than planned, so always account for this in your financial planning to make sure you don’t feel the brunt of leaving work earlier.
Consider a part-time job
Don’t be too quick to give up work altogether. There are plenty of other ways you can continue to make some money without working full time. Try looking into some part-time jobs that don’t require grueling labour.
Volunteer
Another alternative is to volunteer. Yes, you might not get paid, but during the hours you’re working for free, you’re also not spending any money. Retirement can be long, and you’re inevitably going to want to keep busy – volunteering is a great way to keep occupied, give something back and fill your time without splashing out on costly activities.
Don’t overestimate your wealth
It is extremely easy to get carried away and assume you have much more money than you do. A lump sum – no matter how big or small – always seems like a lot of money, but it won’t last long if you’re constantly dipping into it. Try and think about the lump sum as an investment opportunity, rather than just focusing on its capital value.
Consider an annuity for a reliable income stream
Annuities can be a good way to secure a reliable income stream throughout your retirement without much risk. But prices can vary massively and some annuity rates can be especially poor. Always remember to shop around to get the best deals.
Consider different retirement options
While pensions are often the most tax efficient way of saving towards retirement, don’t forget to look at other options to see what works best for you, and what will provide you with the most comfortable retirement. Other options, such as savings, investments or property should all be taken into consideration.
Delay social security/state pension
An easy way to make your retirement savings last for longer is simply by taking your social security/state pension benefits later. If you retire at 66, think about deferring your benefits until age 70. Your monthly benefits are likely to increase over the years in between and the money will last for much longer.
Split your income and outgoings into percentages
It’s an easy task that will make you far more aware of the money you have available to enjoy. Consider your bills, including rent/mortgage and utilities, as well as your mobile phone, broadband, food and other regular outgoings. With the remaining money, work out how much you could save towards things like vacations, and how much is left for miscellaneous spending. Before you know it, you’ll have accumulated a holiday fund without even realizing!
Watch your spending
If you choose not to work and have other ideas for retirement, try to watch how much you’re spending. Remember that you have around eight hours a day to fill – time that was previously spent working. It is easy to want to spend money doing and buying nice things, but try to not to get carried away and spend it too quickly.
Cut regular expenses
As part of this, try cutting your regular expenses. Obviously you still want to have an enjoyable lifestyle, but reassess the regular outgoings you have, and see if they are all essential. For example, you probably have a phone contract, a broadband and TV bundle, perhaps even a gym membership. Try re-negotiating for a better, more affordable contract.
Be mindful of inflation
The cost of living is constantly rising, even if it is at a relatively slow pace. Just remember to take this into consideration when first assessing your finances, as the cost of your bills and weekly shopping now might not necessarily be the same in 20 years’ time.
Allow technology to help you
Apps have made life so much simpler, and they can help out with all elements of our lives. Make sure you use them to your advantage; for example download online banking apps to track your withdrawals and transfers as it’ll make it so much easier to manage your money.
Consider downsizing
Downsizing in retirement will save you a fortune. Not only will a home sale add to your savings, but you might also find your general living expenses are cut, too.
Use cash
It’s simple, but such an effective way of watching your money go further. Credit cards can be risky as we are much more tempted into spending money on things we don’t need and worrying about it later. Drawing out cash and giving yourself an allowance will mean you’ll only spend what you can afford (without being too frugal, of course).
Reduce debt
If it’s possible to avoid entering retirement without any debt, then do just that – it will only leave you lagging behind. Try to tackle any outstanding debt you have by starting with high-interest loans like credit cards first.
Make the most of free stuff
There are tons of benefits waiting for you at retirement, including discounts, free bus passes, cheap cinema tickets and more. Make the most of these and don’t be shy to ask if different places have lower prices for senior citizens.
Use as many coupon codes as you can
There are hundreds of coupon codes just waiting for you to get discounts on a whole variety of products and activities. Visit the likes of coupons.com or groupon.com to save some serious money.
Don’t fall victim to scams
There are millions of fraudsters out there waiting to take advantage of people who are looking to make investments. Whatever you do, don’t fall victim. Many scammers will get in contact over the phone or on e-mail and persuade victims to invest their retirement savings into investments promising “high returns” with little or no risk. The chances are, it’s always too good to be true. Don’t agree to anything on the phone without double checking first.
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