Tags: retirement | savings | budget | social security

How to Retire on Less Money Than You Think

How to Retire on Less Money Than You Think
(Dreamstime)

By    |   Thursday, 16 November 2017 11:17 AM

Worried about never retiring on the savings you have and forced to work for the rest of your life? You could be overreacting to conventional theories and be able to retire on less than you think.

Some experts speculate that you need to equal 80 percent of your final salary to retire. Research, however, reveals people can live comfortably and even just as well as they once did on far less annual income.

A 2014 review by the T. Rowe Price Group found that, on average, the 1,507 recent retirees in the survey were living on 66 percent of income made in their working years, according to Market Watch. Half of them reported living as well or better than they were before retirement. Eighty-five percent said they didn’t need to spend as much as they did before retirement.

Some of the reasons you can retire on less than you think include:

  • No expenses for children — They most likely have left the nest to make a living for themselves. Retirees are often living in a big house they no longer need. Time to downsize and move into a smaller place that’s less expensive with lower taxes, U.S. News points out.
  • Freedom to work part time — Seniors can usually work for extra money no matter how much they have in their savings. They don’t have to be concerned about promotions or the stress of competition in the workplace.  It can be a way to socialize or just have fun.
  • Discounts always available — The cost of living is reduced dramatically because of discounts and perks available for seniors. Joining AARP brings substantial savings in travel, dining, and entertainment. Local subsidized programs for seniors often include free transportation, free meals, and free or low-cost health services
  • Less need to save — Retirees no longer have Social Security or Medicare payroll tax taken from them. And they can now get money and assistance from those programs. That makes their retirement savings last longer, especially if they’ve put away more than 10 percent of income into savings.
  • Less need to spend — Along with no expenses on savings or to support children, new retirees will also find they are usually in a lower tax bracket because of lower income while taking advantage of their savings. Their home mortgage may also be paid off.

Of course, a lot of this good news depends on how well you’ve managed your retirement savings. People about to retire soon or even younger workers can start putting more money, up to 20 percent or more, in their savings accounts to stop worrying and look forward to financial freedom ahead.

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Worried about never retiring on the savings you have and forced to work for the rest of your life? You could be overreacting to conventional theories and be able to retire on less than you think.
retirement, savings, budget, social security
438
2017-17-16
Thursday, 16 November 2017 11:17 AM
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