7 months ago
Although your CalPERS service retirement is a lifetime benefit, and you have otherincome sourcesavailable to you,money can still be tight. Making ends meet is a big concern for many retirees.
Here are six tipsforsaving money during retirement, as part of our series onPlanning Your Financial Future.
- Get back to basicbudgeting.Determine how much money you have coming in, how much is going out, and where it’s being spent. If your expenses exceed your income, look for ways to reduce your expenses, increase your income, or both. Identify what you need vs. what you want as a way to cut unnecessary costs. Don’t forget to plan for the unexpected, such as car repairs and out-of-pocket medical costs. Most experts recommend having savings that cover 3-6 months of living expenses.
- Be mindful of risk.Personal savings and investments can be an important component of your retirement income. Whether you rely on a defined contribution plan, such as a 401(k), a money market account, or more, these investments can carry some level of risk. Higher risk can mean greater returns but could also lead to great loss. Even in retirement, it’s important to diversify your investments as a way to reduce risk, and mix your savings across a wide variety of investments to minimize the impact any one will have on your funds. And be sure to consult a professional financial adviser.
- Manage yourdebt.The best way to avoid debt is to take proactive steps to prevent it, such as paying off credit cards each month. If you find yourself in the red, add up your total amount of debt (credit cards, car loans,etc.) and consolidate it. For example, combine all of your credit card debt onto the lowest interest rate account you have. Then prioritize payments, perhaps by putting the most money possible to the smallest debt balance; once that’s paid off, add that payment amount to the next smallest debt, and so on. Be patient, stick to a plan, and you might be debt-free soon.
- Assess your living arrangement.A big part of your budget may go to housing. Many retirees consider downsizing as away to save moneyonrent, mortgagepayments, property taxes, or upkeep costs.If you decide to downsize, save the difference or put it toward moreof your needs.
- Calculatehealth care costs.Whether you have healthbenefitsthrough CalPERS or not,it’s important to know thecosts and covered services of yourhealthplan.When evaluating your plan’s features, look at the monthly premium amount as well asprocedures, deductibles, and co-paymentsthat may impact your wallet.Factor in any dependents’ medical costs, and whether you’remaking changes that might impact yourhealthplan availability, such as moving to a new location.Finally, it’s important to consider a plan for long-term care should you need help with activities of daily living due to illness, disability, or aging.
- Examine yourSocial Securityoptions.Full retirement age as defined by the Social Security Administration is 65-67 years old. This is the age you can begin receiving the full benefit you’re eligible for. Or you can wait until age 70 to earn an increased benefit amount. Consider waiting a few more years to draw Social Security if you think it will help you reduce your monthly spending.You may be able to get additional income through theSupplemental Security Incomeprogram, which helps seniors and people with disabilities who have limited income and financial resources.
Creating a plan to ensure you’re financially secure can be a challenging process.Usethis checklistas a guide to help you start planning your financial future today.
