So you just retired - congratulations! After years of diligently socking away money for the future, you're finally able to reap the rewards. But does just because you've retired mean you should stop saving completely? While it may be tempting to live it up and spend every last penny now that your working days are over with, continuing to save at least a portion of your retirement income provides important benefits. Maintaining a nest egg gives you a financial cushion in case of unexpected expenses like healthcare costs.
In this blog post -- we're going to be exploring why saving money after retirement is a good idea as well as some different ways how. Saving a small amount from each check or withdrawal also helps ensure you don't outlive your money. While enjoying retirement is important, staying disciplined about saving will help guarantee many more years of enjoyment to come.
Assessing Your Retirement Savings Needs
After years of diligent saving and investing, retirement is finally within reach. But should you continue putting money away once you've stopped working? Absolutely. Here're some reasons why:
People are living longer these days. That's great, but it also means your retirement savings need to last longer. If you retire at 65, your savings may need to fund 15-35 years or more of living expenses.
While the long-term trend of the stock market is up, short-term downturns are inevitable. Investing regularly helps ensure you can purchase more shares when prices drop, and you're not withdrawing money during a market low. This helps your money last longer.
Inflation erodes the purchasing power of your money over time. Although inflation has been low in recent years, it's always a risk that prices of goods and services may rise faster than your savings or even pre-tax income from Social Security benefits. Additional savings and investment returns help offset the effects of inflation on your standard of living in retirement.
If you want to leave an inheritance for your children or grandchildren, you're going to need to keep saving and investing after retirement. The more you can stash away, the greater the inheritance you will be able to pass on to your loved ones. Even small, regular contributions to your retirement accounts over many years really adds up.
The money you save and invest after retirement could generate income to supplement other sources like Social Security and your pre-retirement income. For example, you might invest in dividend-paying stocks, bonds, real estate investment trusts (REITs), or annuities that provide regular interest payments. The income from these investments can help ensure you have enough to maintain your standard of living in retirement.
Keep Your Mind Active
Continuing to save and make investment decisions after retirement helps keep your mind active and engaged. Managing an individual retirement account and investing challenges you mentally and can help combat boredom or feelings of being unproductive in retirement. Staying socially and intellectually active has been shown to promote healthy aging and even help reduce cognitive decline as you start aging.
Keeping up the saving habit, even in minimal ways, will benefit you greatly long-term. Everything helps when it comes to funding a happy retirement!
Ongoing Retirement Expenses to Consider
So why do you actually need to save money? Well once you're officially retired, your expenses don't just disappear. Here are some major retirement expenses to keep in mind:
Housing is typically one of the most significant post-retirement expenses expenses for retirees. If you still have a mortgage, aim to pay it off before actually retiring. However, other housing costs like property taxes, insurance, utilities, and maintenance continue. Consider downsizing to reduce expenses.
Driving less in retirement? Your car costs won't necessarily decrease. You still need to budget for auto insurance, registration, maintenance, and the occasional repair. Public transit and ride-sharing could be more affordable options if driving becomes difficult.
Make the most of your free time by budgeting for hobbies, entertainment, dining out, and travel. Joining local social or activity groups is an inexpensive way to stay socially engaged. Look for senior discounts and free activities in your area.
The reality is saving for retirement doesn't stop once you retire. Develop a realistic budget, check for ways to reduce expenses, and continue saving to ensure your money lasts. With a proper retirement plan, your golden years could be an enjoyable and rewarding time.
Potential Healthcare Costs in Retirement
Healthcare costs also don’t stop once you're retired. In fact, as you age your medical expenses typically increase. It’s important to understand your potential healthcare costs in retirement so you can keep enough in your savings account to cover them.
- Medicare premiums: Once you turn 65, you need to pay monthly premiums for Medicare Part B to cover doctors and outpatient care, and Part D for prescription drugs. Part D plans vary in cost from around $15 to $100 a month.
- Medicare deductibles and copays: In addition to premiums, Medicare costs also include deductibles, coinsurance, and copays for covered services.
- Long-term healthcare: The average cost of a private room in a nursing home is over $100,000 a year. Medicare and regular health insurance typically don’t cover long-term care. Consider buying a long-term care insurance policy to help cover these potential costs.
- Dental and vision care: Medicare doesn’t cover most dental or vision care. You need to pay for exams, cleanings, glasses, contacts, and hearing aids yourself or buy supplemental insurance to help cover these costs.
Planning ahead for these potential healthcare costs in retirement and saving enough to cover them helps ensure you have a secure financial future after you stop working.
Building an Emergency Fund as a Retiree
Once you start saving money in retirement, you need somewhere to keep it. Building an emergency fund is essential for retirees. An emergency fund gives you a financial cushion in case of unforeseen costs.
Start with a modest goal
Shoot for at least $5,000 to $10,000 in an emergency fund. This may seem like a lot if you're on a fixed income, so start by saving just $50 or $100 a month. Once you reach your initial goal, try increasing it to 4 to 6 months of essential expenses like housing, food, gasoline, and medications.
Look for ways to reduce costs
Review your budget to find expenses you can reduce or eliminate. Things like eating out and entertainment are good places to start. Switch to lower cost options for cable TV, phone plans, and insurance.
Take advantage of catch-up contributions
If you're over 50, you can contribute an extra $1,000 to your IRA each year. This is an easy way to build your emergency fund over time through the power of compound interest. Contribute the maximum each year and leave the money invested. In 10 to 15 years, you could have a sizable emergency fund.
An emergency fund gives you security and stability in retirement. Start saving whatever amount you can and find ways to spend less each month. Staying prepared for the unexpected, even in your golden years, leads to greater peace of mind and financial well-being.
Start Saving on Your Phone Bill With EASY Wireless!!
Hopefully this blog post has helped you discover some easy ways to save money during retirement. But what if we told you that we could help you even more?
Well -- EASY Wireless is offering a great way to save on your monthly phone bill: FREE Phones! That's right, thanks to government programs like Lifeline & ACP, here's what seniors could receive:
EASY Wireless Unlimited Plan
- FREE Unlimited Data
- FREE Unlimited Talk
- FREE Unlimited Text
- FREE SIM Card Kit and Activation
- Choose to Keep Your Number or Get a New One
To start with EASY Wireless, apply online by clicking the below:
Start Saving Today!
Or you can come to one of the EASY Wireless's retail stores, where our customer service agent will help you apply for your benefits.