With life expectancy steadily climbing over the years, it’s understandable why a majority of baby boomers worry about outliving their retirement savings. All retirement accounts require a life expectancy component to determine exactly how much you need to save to live a comfortable life after your career. However, during the time when boomers planned for their futures, the ages they thought they would live to were much lower than today’s trend. If you feel burdened by your finances and fear your life will surpass the money you’ve saved, we’ve provided ten strategies to help you increase the longevity of your retirement income. Of course, speaking with a financial professional will always be one of your best options.
#1. Create a Budget
I’ve always believed the best way to stay out of debt, is to make a promise to yourself to never spend more than what you have. By creating a monthly budget, you’re able to visually see how much money you bring in, how much money goes out and ultimately stay in control of your finances. Emergencies can happen when you least expect them, so make sure you include a savings fund in your budget as well as medical and health expenses.
#2. Invest in Stocks
It may seem scary to put your money into something as risky as a stock. Nevertheless, the potential return on stocks is significantly greater when compared to bonds or mutual funds. That doesn’t mean putting all your eggs in one basket though. It’s smart to have a well-diversified retirement portfolio with a combination of each type of investment. Going along with the increased life expectancy rate, many financial planners recommend you subtract your age from 110 or 120 instead of 100 to get the percentage of stocks you should keep in your retirement portfolio. This is due to the advantage stocks have to provide extra growth for your money. Your financial advisor can help you pick the right investments for you.
#3. Focus on Your OWN Financial Security
You’ve probably heard of a phrase along the lines of, “You can’t take a loan out for retirement, but your children and grandchildren can take a loan out for their education, car, home, etc.” The core message of this saying is the importance of putting your financial security before your family members. You may feel obligated to help them when they’re in need, but they have a plethora of other options available to them in terms of borrowing money in the form of a loan. Retiree’s, on the other hand, have far fewer options.