A significant number of baby boomers, those currently aged between 53 and 71, are confronting a retirement challenge. A startling statistic from USA Today reveals, “Half of baby boomers have savings of $100,000 or less for their retirement.” This is indeed alarming!
This limited retirement savings can be attributed to a multitude of factors. Some might have felt the pinch during the housing or stock market crashes. For others, their savings might have been diverted to supporting their adult children.
While the reasons vary, it’s evident that baby boomers are facing a daunting retirement phase. However, here are several strategies for boomers to maximize their retirement savings:
- Extend Your Working Years:
One of the most effective ways to boost your retirement savings is to continue working. This not only delays dipping into your savings but also enables you to defer claiming Social Security benefits. As the Star Tribune points out, “Your monthly Social Security check increases by 8 percent for every year you delay after reaching full retirement age.” But remember, while working longer might be an ideal plan, it may not be feasible for everyone. Health issues or unexpected layoffs can disrupt this strategy. - Engage in Part-Time Work:
When my grandfather was in his mid-60s, he was laid off. Despite a modest retirement fund, he was keen to continue working. He secured a position as a greeter at a local supermarket. Even at 75, he’s still greeting customers. While it’s not as lucrative as his previous role, it helps him save his retirement funds for the future. - Relocate to a More Affordable Region:
If you’re living in high-priced areas like the coasts, consider moving to regions where your money stretches further. In 2016, USA Today listed Fort Wayne and Evansville in Indiana; Odessa in Texas; Huntsville in Alabama; and Wichita in Kansas as cities with the most affordable living costs. Before making a permanent shift, maybe try living there temporarily to see if it meets your requirements. - Consider Living Overseas:
Some retirees are choosing to get more bang for their buck by living in countries where living expenses are significantly lower. South America, Thailand, and Vietnam are emerging as popular choices. It’s crucial to spend some time in these places before making a long-term commitment. - Explore Alternative Housing Arrangements:
You can also look into shared housing options. Consider renting out a room or co-living with your grown-up children. Such arrangements can significantly cut down living expenses. - Trade Your Family Home for Something Smaller:
A lot of retirees remain in the homes where they brought up their children, which are often bigger than necessary. Selling such homes, especially if they’re mortgage-free, can significantly boost your retirement fund. You could move to a cozier house or an apartment. For instance, upon retiring, my other granddad sold his house. He and my grandmother spent summers in a Midwest trailer and winters in Florida, which considerably reduced their housing costs.
If retirement is on your horizon, it’s worth thinking about how you’d like to stretch your funds. For those already retired, sharing your experiences and tips can be invaluable for the next generation.
