Okay, you've come up with your monthly household budget for retirement. The only problem
is the monthly income won't cover your monthly expenses. Here are a few tips to help you make ends meet:
Retire later. If you wait a year or five, you will
give your retirement nest egg more time to grow, and it will last longer.
Certified financial planner F. Dennis DeStefano offers an
example. Say you have $400,000 and decide to retire at age 55. Assuming an 8% investment
return, and the expectation that the money needs to last 35 years (to age 90), you can
withdraw $20,200 in your first year of retirement. Subsequent years withdrawals will be
increased by the current inflation rate. Your funds will be reduced to zero at age 90.
But, if you wait an additional five years until age 60 to
retire, your 401(k) will have grown to $605,000 ($400,000 plus $3,000 annual contributions
compounded at 8%), and you will be able to withdraw $33,100 (in real terms) at age
60—also to age 90 with zero funds left. This is an increase of 64%!!
Reduce your withdrawals by working part time. You
can also make your nest egg last longer by cutting back the amount you withdraw every
year. Consider starting a second career or working part time, so you can reduce your
dependence on your retirement plan.
"One golden nugget I pass on is I ask baby boomers
whether they can develop some secondary employment skills," says Dr. Christopher
Hayes, M.D., a gerontologist and director of the National Center for Women and Retirement
Research.
Reduce your fixed monthly expenses. If you're still
paying off your house, see if refinancing your mortgage can reduce your monthly payment.
It used to be that utility services, like telephone, electricity, or gas, only came from
one source. With utility deregulation sweeping the nation, you can shop for those services
as well. One way to find the lowest price is through online services, such as: www.lowermybills.com, www.point.com, www.insweb.com, and www.mortgage.com. Lowermybills, for instance, costs the
consumer nothing, and promises to lower your monthly bills by $3,000 a year, says CEO,
Matthew Coffin.
 Return to Article
|
