Yahoo Finance 10 Ways to Repair Your Retirement Finances
Fast fixes
If you're approaching the year you want to retire but don't have enough money in the bank to live the lifestyle you want, it's not too late to improve your retirement prospects. Here's how you can fix your retirement finances at the last minute.
Downsize
Your family home is likely more space and a bigger expense than you need. If you move to a house that costs significantly less, you can add the proceeds of the sale to your nest egg. A smaller place could additionally reduce your tax, maintenance and utility bills. Downsizing is also a good opportunity to sell some of the stuff you have accumulated through decades of family life.
Relocate
There's no need to live near your job or in a good school district in retirement. If you reside in a high-cost city such as New York or San Francisco, moving to a place with a much lower cost of living will improve your retirement finances. Pick a place that has the amenities and services you use most, whether that's golf courses or health care.
Pay off your mortgage.
You will be able to get by with a much smaller nest egg if you don't have to make a mortgage or rent payment every month. While you will still have to pay for insurance, taxes and maintenance for your home, they are likely to be a fraction of what you were paying in mortgage costs.
Get more from Social Security.
The age you sign up for Social Security has a big impact on your monthly payments. Your monthly benefit is reduced if you sign up before your full retirement age, which is 66 for most baby boomers. After that point, your benefit increases for each month you delay up until age 70. Waiting allows you to claim larger payments later on in retirement, perhaps when you will need them the most.
Become a super saver.
Workers ages 50 and older can contribute up to $24,000 to a 401(k) in 2016. If you maxed out your 401(k) for 5 years between ages 60 and 65 and earned 6 percent annual returns, you would pad your nest egg with an additional $139,648. Your balance will grow even faster if you get a 401(k) match or other employer contributions to your account.
Put your savings to work for you.
While you can't control your investment returns, you do have a measure of control over how much you are paying to invest. Take a look at the expense ratio of each fund you own. If it's above 1 percent, consider switching to a new fund. You can also shop around for the lowest cost funds you can find, which leaves more of your savings available for spending.
Reverse mortgage
If you are 62 or older and want to remain in your home for the rest of your life, you may be able to tap some of your home equity for living expenses using a reverse mortgage. However, be aware that many reverse mortgages have high fees, your children likely won't be able to inherit your house unless they repay the loan and if you move to a new residence the loan becomes due.
Immediate annuity
An immediate annuity is an insurance product that will provide you with set payments for the rest of your life no matter how long you live, which protects you from outliving your savings and investment losses. However, it's important not to put all of your savings into an immediate annuity product because you will need some cash to cope with emergencies.
Develop a frugal lifestyle.
You may be able to retire sooner if you are willing to cut back your lifestyle to the basic necessities. You can cancel cable TV, ditch your expensive cellphone plan and give up expensive meals out. Familiarize yourself with the free entertainment options in your area, and get used to asking for a senior discount.
Work longer.
Working even one additional year gives your savings more time to grow and reduces the number of retirement years that savings needs to pay for. Delaying retirement can also qualify you for higher Social Security payments if you start benefits at an older age. Even a part-time job can allow you to withdraw less from your savings and give your assets extra time to grow.
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