In contrast to what we normally assume, the expenses during retired life are more than people usually expect. Before retirement, it seems like after cutting major expenses like mortgage and children’s schooling, not much will be left to spend. However, unfortunately in old age, health care, transportation and food expenses increase significantly.
Average Annual Expenditure
According to a Consumer Expenditure Survey by Bureau of Labor Statistics – USA; in 2010, the average annual expenses of people aged 65 and more was about $35,000. The expenses mostly included house decoration, food, transport and health care.
Unfortunately, there is no magical notion to make your savings last longer. Following are some tips that one can use to avoid shortfall in his/her golden age.
Extend your working period
According to a research in Boston College, most retirees faces a shortfall during their retired life. The researchers believe that this gap can be easily filled by extending the working period by few years. Working longer will delay your dependency on savings, this way you can save about $35,000 every year. Not only that, retired people start to age fast when compared to working people. This is because working people stay active, both mentally and physically.
Daniel White, CEO of Daniel White and Associates, says that nowadays, the number of working people aged 55 or more has increased by 4 million. This clearly tells that people are getting more concerned about their retired life and are acting appropriately.
Get a Health Insurance
Getting the best health insurance you can afford is most important. Health care expense is the major constituent of total expenses in this age. If not insured, a single health issue can cause you to cut thousands of dollars from your savings. These expenses are usually unexpected and can cause your golden year to be excruciating.
Delay Social Security
According to Daniel White, most of the people don’t realize that they can get a higher percentage of Social Security by simply delaying to claim it. Generally, people start collecting Social Security by the age of 62 and avail benefits from other sources like IRA (Individual Retirement Account) by 66. If they reverse their choices, i.e. start collecting IRA by 62 and Social Security by 65, they will get 25% more from Social Security. And if they delay it to the age of 70, they will get 33% more.
Although, it is a hard task, it can save thousands of dollars. You must learn to say no to your children. You don’t have to spend that extra money on cars, weddings, wide plasma TVs and other objects of entertainment and luxury. You can save this money to secure your retired life.
Delay Selling Your House
Downsizing to reduce your expenses seems to be a good idea, but one must be very careful in deciding when to downsize. The expenses of a larger home are large and so is its price. The price of your home is continuously increasing. It may be that the price will increase by a greater amount in a year than you can save by downsizing.