Ways to Increase your Retirement Savings Income
Americans believe they need to save $1.1 million before retiring in order to enjoy a comfortable post-retirement life. According to the 2022 Schroders U.S. Retirement Survey, only 22% of the people retiring that year had the money to live a comfortable life after retirement. 56% of the people retiring fear that they’d have less than $500k. So, before realizing how much money you need to save before reaching that stage, find out what ‘comfortable’ means to you.
What Do You Want To Do When You Retire?
To calculate the amount of money you should save, you first need to decide what you plan on doing post-retirement. If you’re confused, you can ponder upon your hobbies and/or your interests. You don’t necessarily need $1million before retiring due to many reasons; no commuting cost, your offsprings are less financially dependent on you, the mortgage will be paid off by that time, and you won’t have to save any more! Some people might do just fine with saving 80% of their annual income. However, if you wish to travel more than you might need or want to, consider saving 90-100% of your pre-retirement income.
Social Security Benefits
Social security benefits are the extra financial help one receives on top of your savings. It accounts for 30% of an elderly’s income, however, the benefit rate is lower for high-income retirees.
Consider Other Alternatives
You can’t just depend on the social security benefits for your retirement savings. Hence, you should also consider other options such as buying a retirement saving plan and investing in high-yield bonds and savings accounts. You can also buy an annuity to provide you with a fixed income once you retire.
Work Part-Time When You Retire
Working part-time as a freelancer or consultant is a great way to earn money and keep yourself mentally as well as physically active when you retire.
Living Options When You Retire
The only big expense after you retire will be the cost of housing! Housing costs will likely be your largest retirement expense and so, if you haven’t paid your mortgage, you’ll have to pay that every month, along with taxes, maintenance costs, and insurance costs.
To generate some extra cash on the side, you can rent an empty room in your house to earn some extra cash. Another choice would be to downsize to a home that costs much less while taking advantage of the equity in your home. Money can also be saved on heating, cooling, maintenance, and taxes if you live in a smaller home in a cheaper neighborhood.
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