Retirees Share Secrets to Financial Security | Aging

You don’t necessarily need a lot of money to set up a financially secure retirement. If you’re willing to carefully manage your expenses, you may be able to retire with a modest budget.


Here’s how to retire well on less money:

  • Know what you want.
  • Start saving early.
  • Don’t chase high-risk investments.
  • Save above-average earnings.
  • Reduce housing costs.
  • Line up utility payments.
  • Get rid of car debt.
  • Move to a less expensive area.
  • Stretch small items.

Know What You Want

Thinking about your interests can help you set aside funds to cover retirement activities. If you’re married, “Take the time to agree on what you want retirement to look like,” says Mike Smith, who retired at age 63 and currently lives in Windermere, Florida. That’s what he did prior to leaving the workforce. “We have traveled the world and will be leaving our family well set,” Smith says.

Start Saving Early

Putting aside funds well before retirement can provide the chance to build wealth through compound interest. “When money is saved and invested, then your money makes more money; then that money makes even more money,” says Marco Sison, who retired in 2015 at age 41 after working in business development for Erickson helicopters. “I funded my first retirement account at age 20.”

Don’t Chase High-Risk Investments

While some financial opportunities may look incredibly promising, diversifying savings and taking a slow and steady approach can lead to higher long-term results. “Don’t look at bitcoin, starting a new business or chasing individual stocks,” Sison says. “I keep my retirement savings in a bond and broad market ETF portfolio.” One rule of thumb to diversify involves subtracting your age from 100. The result can then be the percentage of your portfolio that is invested in stocks. For example, if you are 40 years old, 100 – 40 = 60. Based on this calculation, “stocks are 60% of your portfolio,” Sison says.

Save Above-Average Earnings

If you receive a bonus or have an unusually high income one year, set aside the funds in long-term savings. “In your work life you have some years that for whatever reason end up being outstanding from an earnings perspective,” says Smith, who retired in 2005 as an area vice president for an office equipment manufacturer. “The idea is to live on your normal needs and invest the extra in solid return investments.” You may set aside a small amount for a splurge, but then carefully save the rest. “I followed this advice and have reaped great rewards from it,” Smith says.

Reduce Housing Costs

Downsizing or renting out part of your space may help free up funds in your monthly budget. “I bought my condo immediately after graduation and rented out one bedroom to cut my mortgage in half,” Sison says. “Although not for everyone, if you’re willing to get a roommate or rent out a spare room, you save thousands of dollars a year.”

Line Up Utility Payments

About four years before retiring, Carol Gee and her husband Ronnie of Stone Mountain, Georgia, looked for ways to save money and evaluated their utility bills. They checked to make sure they have the best possible rates and were paying as little as possible each month. “That way we had no surprises come summer or winter,” Gee says. When the couple retired in 2011, after having careers in the military and as a hospital executive and education administrator, they knew what to set aside in their budget for utilities.

Get Rid of Car Debt

Several years before stepping away from their work salaries, Carol and Ronnie Gee evaluated their auto loans. “We paid off all of our vehicles, including a luxury one,” Gee says. By doing so, they didn’t have to worry about lingering car payments on a fixed income.

Move to a Less Expensive Area

Transitioning to a place with a lower cost of living will further cut your ongoing expenses. This could be a lower-cost neighborhood in the same city, a more affordable city in the same country or a cheaper country. “I save money in retirement by living abroad,” says Sison, who currently resides in Croatia. “Jumping on a plane and living in countries like Portugal, the Philippines or Colombia saves me over 50% versus living in the U.S.”

Stretch Small Items

Buying certain groceries and household items in bulk can help reduce the cost of each individual item. “With just the two of us, I purchase large packages of meat and divide (each large package) into two or even three packages if possible,” Gee says. She then freezes the extra packages until she and her husband are ready to use them. Gee also uses this strategy for other staples like sauces and vegetables.

Before buying new home supplies, check to see what you already have. “Repurpose items to further save,” Gee says. She regularly takes old cotton tee shirts and turns them into cleaning rags to avoid purchasing new cloths.

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