If you are in your 50s and you are starting to feel lost with your retirement planning, you are not alone. According to the Federal Reserve’s Survey of Consumer finances Americans in the age bracket of 55-64 have set aside enough funds to produce a retirement budget of $450 a month. That means people in that age bracket have just $450 to pay for all their expenses and if they are lucky they have Social Security to help. If you believe you are in the same boat you still have time to make a difference to your retirement. Here are some tips to help out your retirement budget.
Reduce your consumption – Typical households with children have frugal lifestyles in every aspect. However, once the children have finally left the nest a complete lifestyle change happens. The Financial Security Project at the center for Retirement Research found that household spending actually increased 51 percent on travel and food once children leave the home. The frugal lifestyle should continue even after the kids have left the home. Chances are in your retirement you will need to pay for other things that may have never been in your budget…like expanded healthcare costs.
Don’t plan for retirement, plan to keep working – If you are in you mid-50s you should be considering when exactly you want to retire. Working longer will add to your retirement savings and reduce the number of years you will actually need to save for. Working past the age you qualify for Social Security can actually help to increase your benefit from Social Security. You can actually check out the Social Security calculator to see how much you would be eligible for if delay your Social Security but just a few years.
Be conservative with investments – Looking into investments that are diverse with extendable time frames for investing could be your best option for your portfolio. Bonds are also a good investment strategy for some. However, bond investments should be done later in life and also gradually. Consult your financial advisor for further investment advice.
View your home as an asset – According to a recent Harvard study, Housing America’s Seniors, seniors have the highest home ownership rates of any age group in the United States. While seniors do have the highest percentage of ownership more than 25.5 million seniors over the age of 50 have a traditional mortgage on their home. Many baby boomers have the equity in their home but are not using it to its full advantage.
Many seniors are turning to the reverse mortgage program to provide the extra equity they need to be able to retire or to help fund their current lifestyle. With a reverse mortgage seniors 62 and older can tap into their equity in their home and receive the money tax-free. Seniors are using the reverse mortgage to pay off an existing mortgage (if they have one) and use the remaining equity to pay medical bills, travel or just have the peace of mind knowing they can the money for any unforeseen expenses.