15 Things To Do Immediately If You’re Outliving Your Savings
In today’s economic climate, outliving your savings is a significant concern for many, especially retirees and those approaching retirement. The rising cost of living, unexpected medical expenses, and prolonged life expectancy can all contribute to this financial strain. If you find that your savings are dwindling faster than expected, here are fifteen crucial steps to take to safeguard your financial future.
1. Review Your Budget
The first step is to meticulously review your budget. Look for areas where you can cut back, such as dining out, subscriptions, and non-essential goods. Assess your necessary expenses like housing, utilities, and health care. Sometimes, small adjustments can cumulatively lead to substantial savings.
2. Prioritize High-Interest Debt
If you have debt, especially high-interest debt like credit card balances, prioritize paying it off. High-interest rates can cripple your ability to save and manage cash flow effectively. Consider transferring balances to a lower-interest card or consolidating debts to simplify payments and reduce interest rates.
3. Downsize Your Lifestyle
Consider downsizing your lifestyle. If you live in a larger home than necessary, moving to a smaller, more affordable space can reduce your monthly expenses significantly. This also applies to other assets such as cars, memberships, and vacation habits.
4. Explore Passive Income Sources
Passive income can supplement your savings without requiring active work. Rental properties, dividends from stocks, and royalties are common sources. Online platforms also offer opportunities to earn passive income through digital products, affiliate marketing, or monetizing a blog or YouTube channel.
5. Delay Social Security Benefits
If you haven’t started taking Social Security benefits, consider delaying them. Delaying past your full retirement age can increase your monthly benefits significantly, providing more financial security in later years.
6. Tap into Home Equity
If you own your home, consider a reverse mortgage or home equity line of credit. These options can turn part of your home equity into cash, which can be used for daily living expenses while allowing you to stay in your home.
7. Adjust Investment Strategies
Consult with a financial advisor to review and possibly adjust your investment strategies. As you age, your investment approach should shift towards more conservative options to protect your capital while still providing growth opportunities against inflation.
8. Seek Professional Financial Advice
Hiring a financial advisor can provide personalized strategies tailored to your financial situation. They can help optimize your asset allocation, reduce taxable income, and plan for long-term healthcare needs.
9. Minimize Taxes
Understanding how to minimize taxes can significantly affect your net income. Strategies such as tax-loss harvesting or investing in tax-efficient accounts like Roth IRAs can help preserve more of your money.
10. Apply for Government Assistance
Check if you qualify for government assistance programs such as Supplemental Security Income (SSI), Medicaid, or food assistance programs. These can provide relief in covering essential costs.
11. Reduce Healthcare Costs
Healthcare can be one of the largest expenses in retirement. Look for ways to reduce these costs by choosing appropriate insurance plans, utilizing generic medication options, or exploring healthcare sharing plans.
12. Embrace a Minimalist Lifestyle
Embracing minimalism isn’t just a lifestyle choice; it’s a financial strategy. It focuses on reducing your material possessions and living needs, which can dramatically decrease your monthly expenses.
13. Consult with Family
Discuss your financial situation with trusted family members. They might offer direct support or suggestions for managing expenses and assets. Family members can also help in managing real estate or other physical assets that might be difficult to maintain.
14. Continue Education and Skills Development
Investing in your education or learning new skills can open opportunities for part-time jobs or freelance work. Online courses are available in almost every field imaginable, and many are tailored specifically for older adults.
15. Consider Relocation
If your current location is expensive, consider relocating to an area with a lower cost of living. Many retirees find that moving to smaller towns or different states can drastically reduce their living expenses without sacrificing quality of life.
Your Savings Might Not Suffice
When you realize your savings might not suffice, it is crucial to take immediate action to reassess and adjust your financial plans. By implementing these strategies, you can better secure your financial health and ensure a more comfortable and sustainable lifestyle.
Drew Blankenship is a former Porsche technician who writes and develops content full-time. He lives in North Carolina, where he enjoys spending time with his wife and two children. While Drew no longer gets his hands dirty modifying Porsches, he still loves motorsport and avidly watches Formula 1.