This is not rocket science although some financial advisers will try to make you think that it is. If you want to avoid penny pinching in retirement, there are some basic rules that need to be followed throughout life and they are pretty simple. Keep working, save for retirement and save for emergencies. Finally don’t touch either of these savings areas until you actually retire or have a real emergency. Sure there are some calculations that need to be done to avoid drawing too much money out too quickly, but for the most part you need to set sufficient money aside for retirement.
Steps to Take to Avoid Penny Pinching in Retirement
- Work longer
- Reverse mortgage
- Reduce spending
- Save more
- Start saving early
Work longer – while you may have wanted to retire early, if you do not have the money to do some of the things you want to in retirement, you may have to work a little longer than you planned. Every extra year you work adds to your savings and provides income to live on.
Reverse mortgage – we are not fans of a reverse mortgage, however if you have equity in your home and do not want to move, then a reverse mortgage is one way to get at some of the money locked up in your home. Of course at some point you will need to sell your home to pay off the mortgage that has accumulated through a reverse mortgage.
Reduce spending – examine all of your expenses. Decide which ones are must haves and those that are nice to have. Reduce your spending wherever you can without entering the penny pinching mode.
Save more – more cash towards your retirement. Set aside at least 10% of your gross income every week or every pay check. Start early when you begin working and do not touch it until it is time to retire!
Start saving early – start on your first job and invest 10% of your income. Once you get use to doing this and living on 90%, you will not miss it. Your retirement will be secure providing that you work a normal life and do not touch your savings until you actually retire.