Retirement has many rewards, but perhaps the most important is the ability to live off the savings you have amassed throughout your working years. According to the U.S. Department of Labor, the average American is spending 20 years in retirement. In many cases, your retirement may be even longer. Are you confident that you have saved enough to cover your entire retirement? In 2014, the Employee Benefits Research Institute (EBRI) reported that only 29% of workers are very confident they have enough money to take care of basic expenses in retirement. That’s down from 38% twenty years ago. You can boost your confidence with smart strategies to stretch your money in retirement. Here are three tips to get you started.

TIP #1: CATCH UP
Before you retire, take advantage of ‘catch up’ provisions made available by the IRS. If you’re age 50 or older, you may make an additional contribution of up to $6,000 to your 401(k) retirement plan in 2016. If you have a traditional or Roth IRA, you can make catch up contributions of up to $1,000 in 2015 and 2016. By using these provisions to your advantage, you can add extra padding to your retirement nest egg.

TIP #2: DOWNSIZE
Your home is probably one of your greatest assets. According to EBRI Notes (July 2012), 8 in 10 Americans report living in houses they own at the age of 65. However, after retirement, you may not need the same amount of space that you did while working and raising a family. According to the Social Security Administration’s 2013 report Expenditures of the Aged, at 35% housing is the largest component of expenditures for those aged 65 or older. Whether you own or rent your home, reducing your housing costs can help you stretch your retirement savings or free up funds for other activities such as travel. In addition to downsizing, you may also consider relocating to a community with a low cost of living, or one that offers other conveniences such as easy access to healthcare or amenities within walking distance.

TIP #3: DELAY
By simply delaying the start of your retirement, you create valuable advantages. Not only do you extend your potential income earning ability, you also gain additional time to save, and to watch your savings grow. If you delay your retirement, you’re not alone. According to a 2013 study by the Associated Press-NORC Center for Public Affairs, nearly half of workers plan to retire at an age later than what they expected when they were 40. Many cite financial and health-related needs as the most important factors influencing this decision.

Moreover, if you choose to work part time throughout your retirement, you’re in the majority. According to the same survey, 82% of Americans aged 50 or older report that they are likely or very likely to do some work for pay throughout retirement.

Another strategy to stretch your retirement savings is to delay when you begin receiving Social Security in order to maximize the benefit you receive. While you may begin receiving benefits between ages 62-70, waiting until your full retirement age age will ensure you receive your full benefit amount. Additionally, benefits are increased by a certain percentage if you delay further beyond full retirement age, all the way until age 70. If you delay your Social Security retirement benefit, remember to still sign up for Medicare at age 65.

Article written by Dr. Daniel Crosby, furnished by Jerry Maldonado.

www.pacificadvisors.com/jerry_maldonado

Jerry Maldonado
Jerry specializes in retirement, insurance and tax off-set strategies for professionals and small business owners.His focus is to help clients identify their definitions of legacy and financial security while simultaneously implementing innovative strategies to help make those financial goals a reality. For more information on his services, he can be reached at [email protected].