Stretch Your Retirement Savings with These Six Tips

Retirement should be a time for enjoying the fruits of your long years of working. However, with increased life expectancy and the rising cost of living, it has become essential to make the most of retirement savings to ensure financial security throughout your golden years.

Here are some tips for stretching your savings so you can live comfortably on your fixed income and avoid depleting your retirement savings.

1. Use the Social Security estimate calculator to assess your expected benefits. Also, include any anticipated income from pension plans. Then, calculate your expenses. How much will you need to withdraw from your retirement funds to cover your monthly expenses?

2. Make catch-up contributions. Individuals 50 or older can add higher contributions to retirement funds to help save more aggressively as they reach retirement age. The catch-up contributions for someone over 50 are currently $1,000 additional for traditional or Roth IRAs, $7,500 for 401(k) plans, and $3,500 for a Simple 401(k).

3. Delay Social Security benefits. While you become eligible for Social Security benefits at age 62, delaying your claim until full retirement age (typically between 66 and 67, depending on your birth year) or even beyond can significantly increase your monthly benefits. Delaying benefits also ensures a higher payout for surviving spouses.

4. Adjust your investment strategy. Consult with a financial advisor regularly to ensure your investment portfolio aligns with your goals and risk tolerance as you approach retirement.

5. Create a budget. Developing a comprehensive budget is crucial for effectively managing your retirement savings. Track your income and expenses to understand your financial situation clearly. You can allocate more funds toward your retirement savings by identifying areas where you can cut costs or adjust your spending habits.

6. Downsize and simplify. As you transition into retirement, reassess your housing needs and consider downsizing. Moving to a smaller, more affordable home can free up cash and reduce expenses such as mortgage payments, property taxes, and maintenance costs.