Retiring in ten years or more might seem a long way to go. But, if you still have divine favor to live on, that time might reach like a day. Most retirees usually have several strategies and plans underway to help them cope up with after-retirement life. Some of those strategies do include investments and savings. Financial experts advise retirement savings should begin ten or fifteen years before the retirement year. Meaning, if you’re retiring in the next ten years, start saving now. What is you don’t want to save? How do you retire after those years? Let’s see how.
What Failing to Save for Retirement Can Cause
While you can manage to retire and live comfortably after that without savings, doing so can result in some severe problems. Let’s first highlight what may happen if you don’t save for retirement. Here are some of the issues that may occur:
- You’ll lose opportunities. When you save money, you can feel confident to take advantage of any arising opportunity as you age. If you don’t, those opportunities can go away at any time. Your choices in life also become more limited.
- You’ll rely on help from others. Most seniors find it fair for their adult children to support them in old age, which is acceptable. But what if you don’t have children who can do that? It means you’ll be stuck asking for help from others. Even if they’re your children, you don’t want to stress them out all time to assist you or become a liability.
- You’ll lose your property and assets. You need money to survive, thus without savings, what will happen? You’ll end up selling assets either willingly or unwillingly to get money. Some end up relinquishing even things they wouldn’t imagine giving away.
- You might end up in debt. If you didn’t save, it means money has to come from somewhere. Most seniors who fail to save for retirement end up living a life of debts when they’re supposed to be debt-free and enjoying their hard-earned savings.
- You’ll have to keep working. One reason for retiring is because someone is aged and can’t do much at work. Failing to save can mean that even after retiring, you’ll have to continue working for sustenance. Some end up doing menial jobs, for that matter.
Retiring Without Savings
Is it possible to retire without savings? Yes, of course, it is. Savings is part of the retirement investment strategies that people do have when planning to retire. It’s not a rule to retire with savings. You can use other means to steer that goal forward. People who don’t look up to save to retire can quit whenever they want as they’re not bound to save up to some amount before they can do so. If you’re planning to retire in ten years without savings, here’s the plan:
Make Extra Money
You need to find new ways of bringing in more money such that by the time of retirement, you’ll be financially stable. The secret to doing so is to invest now. Begin investing as much as you can afford. Several investment types are available, and you can make fair use of- real estate, stocks, funds, bonds, and commodities. Venture into more than one business (diversify the investment portfolio), exceptionally long-lasting ones. Real estate investment is one viable opportunity to try out. For more investment tips, visit Bugis Credit.
Downsize Your Lifestyle
What if you’re living a luxurious life now? Will you manage to keep up after you retire without savings? If not, it’s time to downsize your lifestyle and seek a simpler one. Consider moving into a smaller apartment or to a more affordable place. Learn to use only one car or public transportation. Find other ways to regulate your expenses now to prepare for life in the next ten years.
Take Advantage of the Social Security Fund
In retirement, some seniors usually depend on social security as their primary source of income. According to one statistic, half of those retirees expect it to form 50% of their income source while 1/5 expect it to be 80%. Therefore, now before retiring is the best time to make your social security income count and ensure to maximize each dollar/penny. Then, when you do retire, social security will save you at an appropriate time.
Make Your Retirement Accounts Count
It’s probably time to take full advantage of retirement accounts, more so the catch-up contributions. Try to increase your retirement contributions, if possible, to the maximum allowed in your IRAs, 401(k), or other retirement plans. When close to retiring, you can consider consolidating accounts to simplify investment management and get a clearer picture of the total retirement assets you have. Ask your financial advisor for assistance on account consolidation.
Pay off Your Debts
If you retire with huge pending debts, it can be devastating. Now that you’re not planning to save for retirement, why not use the opportunity to downsize and pay off all your debts? If you had taken a loan for school fees, mortgages, investment, or any other reason, strive to clear it before retiring. That will help you retire debt-free and start life after that with less stress.
Calculate Your Possible Retirement Income and Evaluate the Expenses
Calculate the total likely income you’ll get on retirement from sources like employer pensions, retirement contributions, and social security. Once you figure out how much you’ll earn after retiring, analyze the retirement expenses and how much you’ll spend on each of them. What you spend will depend on after-retirement life.
Consider future medical costs and, if possible, get health insurance to cover health care expenses at that time, which may be higher than now. To last a lifetime with your retirement income and other assets, the rule of thumb is to spend 4% of them annually in retirement.
Retiring without savings can be scary but not impossible. Suppose you plan to retire a decade away. In that case, you can begin careful planning and setting realistic investment goals that will help you live comfortably during retirement. Remember, even if you were to save for retirement, you’d still need other strategies to generate more income to last you throughout a lifetime.