Inflation is super stressful, and not only because of the higher costs now but also because of what it means for our futures. It’s a huge concern for retirement savers because a rising cost of living means they’ll need a larger nest egg to cover all their expenses. And some are struggling to set aside anything for retirement as it is.
If just thinking about this raises your blood pressure, you might want to give the following strategy a try.
How to save more and slash your retirement expenses
Saving more for retirement often means diverting a larger percentage of your income to retirement savings, but this can be a challenge for most people, especially with record inflation. Fortunately, there’s another way to boost your savings without taxing your budget further today — but it comes at a cost.
Delaying retirement helps you save more by giving you additional time to save. You can continue to live off your paychecks and set a portion aside for retirement. In the meantime, the money you’ve already invested for retirement will continue to grow. You might experience some losses, especially amid recessions, but if you leave your retirement savings alone, there’s a good chance it will rebound when the market recovers.
Pushing back your retirement date also makes your retirement shorter and, by extension, less expensive. If you’d initially planned to retire at 60 and expected to live to 85, you’d have to save enough to cover 25 years of living expenses, plus a cushion for whatever unexpected costs might arise. But if you delay retirement to 65, now you only need to save for 20 years of retirement. If you plan to spend about $50,000 per year in retirement on average, delaying retirement by five years could cut your savings target by $250,000.
And you don’t need to put off retirement that long in order to make a difference. Even a few months’ delay could give you the financial breathing room you need to retire comfortably. But it all depends on how much you’ve already saved and how far you have to go. Only you can decide how long you feel you need to delay.
Alternative ways to get the money you need
Delaying retirement won’t appeal to everyone, and for some it isn’t always feasible. If you become unable to work, lose your job, or have to take care of a sick family member, you may not be able to delay retirement even if you want to. There are some other options, but they may not work quite as well in all cases.
First, you could transition slowly into retirement. Rather than quitting the workforce all at once, you could gradually reduce your hours a little at a time until you’re fully retired. This way, you don’t have to drain your retirement savings as quickly. Not all employers will allow this, though. If yours doesn’t, you might have to choose a different strategy or consider a different job as you transition into retirement.
You could also build your nest egg faster by starting a side hustle, negotiating a raise at your existing job, or switching employers if you find a better offer elsewhere.
You can also use a combination of these strategies if you prefer. The important thing is to come up with a plan that you believe will give you the money you need for retirement. If you’re worried your savings are going to run out, it’s best not to retire just yet.
The $18,984 Social Security bonus most retirees completely overlook
If you’re like most Americans, you’re a few years (or more) behind on your retirement savings. But a handful of little-known “Social Security secrets” could help ensure a boost in your retirement income. For example: one easy trick could pay you as much as $18,984 more… each year! Once you learn how to maximize your Social Security benefits, we think you could retire confidently with the peace of mind we’re all after. Simply click here to discover how to learn more about these strategies.
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