5 ways to retire on a small income
Saving a bundle during your working years is not the only way to prepare for retirement. Follow these tips to improve your chances of being comfortable -- and happy -- later in life.
We all want to be happy and comfortable in our golden years. To get there we focus on saving money every month, investing for the long term, and figuring out when we should retire.
A huge step in the right direction is to be financially free by the time we leave the workforce, and one of the quickest ways to get there is to make more money. However, asking for a raise or finding a more lucrative job are not strategies everyone can pursue. Luckily, there are many ways to prepare for a secure retirement without a large income. Here are five ways to improve your chances of having a comfortable retirement.
Focus on income.
One of the main reasons we fear retirement is because of the lack of steady income. Most people in their working years attempt to increase their net worth, ignoring how that lump sum can be translated into a stream of income for the future. As a result, they have to deal with the emotional impact of always seeing their nest egg decrease as they withdraw from their savings in retirement. Instead, focus on setting up income streams for retirement.
One of the most efficient ways of reaching your retirement goals is to cut your expenses. When you are able to reduce how much you spend, you can not only save that extra money, but also learn that you need less to live a comfortable life. If you end up saving too much for retirement you can always inflate your lifestyle later. Post continues below.
Hang out with frugal people.
No one wants to be called cheap. But what's deemed cheap in some social circles is admired in others. If you enjoy living frugally, then you will find it even more enjoyable meeting others who share your passion.
Enjoy your hobby, not the buying process.
Many people spend quite a bit of money on their hobbies, and they blame their passion for the increase in spending. I'm sure there are ways to enjoy the same hobby without buying so much stuff. Do you really need a different camera lens for every situation to enjoy photography? Is it a necessity to have the latest equipment to appreciate a sport? Learn to enjoy the hobby rather than the impulse spending. You might actually discover a whole new perspective towards your hobby.
Find a company where you like working.
Let's face it: Most people want to retire early. Yet people never quit their jobs if they love what they are doing. Some people will tell you to find a job in an area about which you are passionate, but the company has to have the right culture too. It doesn't matter how much you love the line of work if your boss is always being unreasonable. Find a company where you love the people and culture, and you will naturally be more passionate about what you do. When you enjoy your work, you can work well past traditional retirement age and still be happy.
More on U.S. News and MSN Money:
- How to Maximize the Higher 401(k) Contribution Limit
- When only one of you can retire
- In Pictures: The 10 Best Places to Retire in 2012
- Is retiring early too risky?
- Retirees Need to Plan for a Support System
- Calculator:Am I saving enough for retirement?
I retired a few years back at 55. I didn't have any money in the bank, and only a very small pension
to support myself. (But I did have a couple of things going for me.) One was health insurance, I'm a veteran and the VA takes very good care of all my medical needs for very little cost. Secondly I was lucky enough to own my own home with no mortgage on it. (I just pay the monthly utility bills, and yearly property taxes.) I also don't owe anything. I learned to live without credit, credit cards, etc., so if I don't have the money to pay cash for what I want? I don't get it! I travel any place I want, and have all the material things I need. But here’s the funny thing about not having any credit history is that you can't get a loan for home repairs. (I can get a car loan though.) I tried a few months ago to get a home loan for some house repairs, and when I sat down with the local loan officer at the bank and he pulled up my credit score, he was astounded to see it read 0,0,0. He smiled and told me he had never seen this before, and he was sorry he couldn't help me. I smiled and told him that was okay. So here you have someone who owns their home, has a steady income. But because they have no credit history they can’t get a home improvement loan. Maybe I’ll start doing seminars and showing people how to live on a small income.
With very few exceptions, how you will live in retirement is based on how you live when working. If you are a spender and have to always have the latest this and that, you will never be able to retire the way you want to or maybe not at all. If on the other hand, you save from the start of your working career, live under your means, and continue to hone your knowledge of financial matters, you will probably be able to retire early if you wish to.
IT IS ABOUT CHOICES - WHETHER THEY ARE WISE OR FOOLISH!!! Many people are apart of the DUMB MASSES - always having to try and keep up with other people or surpass them.
I will be 62 next April (will start my SS), and have been unemployed for over 2 years (36 years in the now corrupt banking industry). Although we have a 92 Honda with 281K miles and a 1998 Toyota with 190K miles, they run great and look fine. We have no credit card debt and only a small mortgage. I have investments outside retirement made in the mid 80's thru mid 90,s as well as IRA's (traditional and Roth) and 3 former 401K accounts from previous employers. I also have a small pension from my last employer. My wife also has IRA and 401K from former employers.
Health insurance is an issue. We are trying to live healthy and exercise. Spending time with my 93 year old Dad and doing work in my church is much more satisfying then trying to make some corporate goon wealthy!
We are very well set up for retirement(SS, Pension, 401k and savings) and our only current debt is the house and cars.
but part of our plan involves selling the bigger family home and using that money to either move into a smaller 1 story home...or rent...when the big house becomes too much and pocket the difference (it will be paid off before we retire).
Also, we plan to (if health allows) to have part time jobs to keep active and involved (also keeps us out of each others hair, a big concern for US,,,lol)...this would be "free" money for doing the little things in life.
Finally, we plan to live simply...enjoying family and friends
I have some money into the IRA, from that I take enough for propriety taxes and some to leave on. All together I need a minimum of 24-28 thousand at year, but i,m doing with less,
Any suggestion from any one? What can I do before, my IRA is all gone?
Any suggestion well be appreciated. Thanks
Start to prepare for retirement early. I am 41 years old and would consider myself very lucky. I recently had open heart surgery to fix an anuerysm/valve problem. After this experience you quickly realize that working is not everything only a part of a fulfilled life and that family and friends are the only items with true value. I am about 6 months away from paying off my mortgage. Our mortgage payment will then go into a retirement/college account. I have 3 kids ages 11, 9 & 3. My wife and I have both committed ourselves to retiring in our mid fifties (55-58). The trick is to live within your means and always save first. Do not buy on credit. A happy and fulfilled life for most is not the possessions owned but the family and friends that you surround yourself with. Be kind to everyone. I would also say many people who don't retire have not developed interests or hobbies away from work. Work to live a simple life and keep your home, work and relationships uncluttered.
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
ABOUT SMART SPENDING
LATEST BLOG POSTS
Occupy Wall Street bought and forgave the student loan debt of more than 2,700 Everest College students.
VIDEO ON MSN MONEY
BLOGS WE LIKE
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'