Top 5 Ways to Afford a Prosperous Retirement Living

 In Retirement

retirement living

If you’re like a lot of people in your 60s or getting close, you’ve made some costly financial mistakes. Perhaps they’re even affecting your plans to retire.

While this is an unenviable spot to be in, I have five ways you can try to dig your way out in a short period of time.

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Rethink Retirement Living

For most of us, retirement living has long meant quitting work at 65, moving somewhere warm and spending our remaining days doing only those things we love most.

It’s always been a nice thought, but it’s no longer a very realistic one. Saving the money required is hard (even for the very wealthy).

On top of that, the Social Security retirement age is going up.

What this means is that you’re going to need to let go of that old fantasy. That’s all it is now: a fantasy.

Instead, plan to work longer and enjoy fewer of your Golden Years. This doesn’t have to be so depressing, though.

If you really hate your job, then start looking around for ways to replace your income. Maybe you can switch to a competitor or use your skills in a different field.

There’s also the option of switching to a part-time gig where you’ll still bring in cash but get more time off.

Reexamine Your Debt

Here’s another idea I encourage you to revisit. Look at your debt from medical bills, credit cards and unsecured personal loans. Does that amount to half or more of your gross income?

If so, start looking into debt relief immediately. While you’re at it, make sure you change that perspective of yours that viewed that debt accumulation as okay.

Furthermore, if you’re thinking about investing to help plan for your retirement living, I would say that now probably isn’t the time. In the battle for your funds between investing and paying off debt, go with the latter for now.

Tap into the Value of Your House

A house with substantial equity could be a goldmine for your retirement living efforts. For example, you could downsize. If you’re an empty-nester, you may find it’s quite liberating to get rid of a place you hardly use. Take the profit from the sale and put it toward retirement.

A reverse mortgage may help too. You’ll immediately have a nice lump sum or line of credit you can tap. As soon as you reach 62, this becomes an option.

Speaking of your home, think about where you’re going to retire and see if you can do it somewhere with a lower cost of living. Downsizing this way will make your retirement living bill a lot less.

happy retirement

Put Off Social Security

Earlier, I mentioned that the age for social security is going up, so part of this advice is already taken care of for you. Still, I fervently recommend that you put it off even longer if you can.

I’d say that the vast majority of people are better off avoiding the application for social security until they reach their full retirement age. Doing so would mean at that a $1,500 monthly check would inflate to at least $2,000!

Furthermore, if you can wait until your benefits max out (at the moment, that would be 70), that $1,500 check would turn into $2,640 a month!

This is especially important for you couples out there because, when one of you passes on, the other will receive the larger of the two Social Security checks.

Keep this in mind: every year you can hold off past 62 will earn you roughly 7.5% more to your benefit.

Save with a Vengeance

This one is a bit of a Hail Mary, but if we’re really pulling out all the stops here, then it’s definitely worth bringing up. If you make enough of income at the moment, then I encourage you to save with a vengeance. By this, I mean making saving your one and only financial goalaside from paying your bills and staying fed.

While a long shot, if you’re income is sufficient and you truly have the drive, you could save your retirement living plans with this desperation play.

You’ll have an easier time with this if you get downright aggressive with your saving too. If you don’t absolutely need something, don’t spend a dime on it.

To be clear, I’m not suggesting that this strategy alone is going to necessarily be good enough. It can close the game between your current funds and where you want to be in 10 or 15 years for retirement, though.

Of course, it will take an impressive amount of self-discipline to benefit from.

BONUS TIP: Asset Dedication

I’m a big supporter of the asset dedication approach because it’s such a powerful way to save for retirement.

The fundamental ideas behind this method of investing are founded in dedicated portfolio theory and take advantage of your portfolio’s matching cash outflows in the future.

Invented by Dr. Stephen J. Huxley (Professor of Information and Decision Science at the University of San Francisco) and a fellow researcher from that institution, Brent Burns, and introduced to the world through “Asset Dedication: How to grow wealthy with the next generation of asset allocation” in 2005, I am confident this is the right route for most people.

In simplest terms, this approach divides your portfolio into three categories based on assets: cash, bonds, and stocks. This approach gets its name because these assets are then dedicated to the investor’s specific and unique goals.

This method also relies heavily on the reliability of bonds, as a portfolio of individual bonds could provide a predictable stream of cash inflow. A bond portfolio is also immunized from a risk of rising interest rates if bonds in a portfolio are held until maturity.

Just because you’re in a rut at the moment doesn’t mean you have to stay there or give up on retirement living.

Instead, get to work right now putting the above tips into action, and you’ll be retired before you know it.

early retirement

Sergey Sanko
Sergey had started an IncomeClub after years of being an investment advisor for high affluent investors and managing fixed income securities. He is the lead investment advisor representative and holds a Series 65 license. Sergey earned his Executive MBA degree from Antwerp Management School.
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