You are facing retirement age and there is an important issue which you've been ignoring that can no longer remain ignored. You do not have enough money to retire. No matter how you run the numbers it looks like a financial disaster of Titanic proportions is certain.
If this frightens you, it should. As you near retirement age it is likely you will experience a drop in income. The future of Social Security is in doubt. And if you plan to work past 65 there are no guarantees your health will allow you to do so.
It is important to plan on getting by with less money. If income goes down, expenses must decrease.
Here are eight ways to get by on less money as you face retirement.
1. Downsize your house.
This is the single best way to get by on less. Your family is raised. Now is the time to consider selling and moving into something smaller. If you have equity in your home use it to pay cash on a smaller home. Or, if you must finance, at least your house payment will decrease by purchasing a smaller home. And, with a smaller home, your monthly operational costs will also decrease.
2. Shop for lower auto insurance rates.
How long has it been since you've shopped for lower car insurance rates? I'm guessing it's been a long time. We typically pay the insurance bill every month, year after year, and don't take the time to shop for better rates. You might be surprised at how lower your rates might be if you take the time to check around.
3. Drive a junker.
I drive a 15-year-old car with rust and dents. Why? I made the decision to pay cash for every car. The most terrible financial decision you can make is to borrow money on a depreciating asset. It's great to drive a new car but it's value plummets year after year and you are paying interest on something with sinking value. Pay cash for what you drive. Here's a hidden benefit with driving a junker: your insurance costs can be much less.
4. Shop at the secondhand store.
Two days ago I went shopping for a new pair of jeans. A regular pair of Levis was priced at 60 bucks. Guess what? You can buy the same thing at a secondhand store for less than 10 bucks.
If shopping at a secondhand store feels beneath your dignity turn it into a game. I'm not at the point financially where I need to shop for used items at a thrift store but it has become a game. And the name of the game is, "How much can I save?" The next time you need to buy something take a trip to the thrift store and see how much you can save.
5. Take cheaper vacations.
Here's another way to make a game out of getting by on less. Find ways to take cheaper vacations. There are many ways to cut costs when planning a vacation. Sometimes, the best vacations are the ones where you've spent the least amount of money.
Here's one idea. Consider flying on the busiest air traffic days of the year. We did this recently and the flight was oversold. My wife and I were each given $600 vouchers to take a later flight. The later flight was also oversold and we missed by one person each getting another $800 each to fly the next day.
6. Become acquainted with your local library.
It is easy to forget you can get books for free at a place called the library. Many today are buying books from Amazon.com; forgetting they can get books at the library. And if the book you want is not on the shelf they can get if for you through an interlibrary loan.
The library also serves as a source for free movies. And if you are on a tight budget you can even get free Internet access and the use of a computer in most libraries.
7. Change your diet.
Convenience food comes at a higher price than food you prepare yourself. Frozen foods which only need heating up come at a premium price. One way to save money is to stop buying higher priced convenience foods.
Discover new foods to eat which you can prepare at home. Refuse to buy those high-priced meals in the freezer section. If you look closely at your weekly food purchases you can find ways to save money.
8. Get regular health checkups.
This may seem counterintuitive but it's true. If you want to save money you ought to get regular health checkups. Why? Because a checkup will catch health problems early. If you delay going to a doctor the costs of treatment will far exceed the costs of prevention or early treatment.
If you are nearing retirement age now is the time to start getting your financial house in order. Entering into this new chapter of life can be scary. But if you follow these suggestions you will be able to meet the financial challenges ahead.