Didn’t Save Enough for Retirement? 10 Tips for Making It Work

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Editor's Note: This story originally appeared on NewRetirement.

If you think you haven’t saved enough for a truly secure retirement, think again. The impossible could become possible with these creative ways to retire.

You see, saving diligently your entire life and then quitting work to play bridge is only one way to get to retirement. And, the odds are that it is not your way.

There are literally hundreds if not thousands of different levers that can be used to pull off financial independence in your 50s, 60s and beyond.

Following are several ways to retire even without adequate savings.

1. Take a mini-retirement or gap year

Happy senior woman
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If you are emotionally or psychologically ready for retirement, but your finances are not quite there, you might explore taking a mini-retirement — an extended vacation (three to 12 months) from work.

Many people nearing retirement age find that an extended break from work is enough to recharge and re-energize. The trick is convincing your employer to let you have this precious time off.

It may be worth exploring your individual situation with a human resources manager to see if unpaid sabbatical leave or paid leave programs are available.

Quitting your job with the hopes of finding a similar job upon your return is another option. However, many people who take a retirement gap year actually discover an encore career and new passions during their mini-retirements.

If this idea interests you, learn more about taking a sabbatical, mini-retirement or gap year.

2. Prioritize what’s important and dramatically scale down expenses

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Living frugally is never going to be Easy Street, but it can be extremely rewarding to stay focused only on the things that are truly important to you.

Most financial advisers make the assumption that we need to maintain our lifelong spending habits when we retire. While this is true for most of us, many people redefine themselves in retirement and can dramatically reduce spending — one of the best ways to retire securely.

Retirement is an excellent time to take stock of what you have and what you want. If you know what is most important to you, you can set goals and figure out a way to achieve your highest priority.

A few tips:

Look carefully at your current spending: When you have established what is important to you, assess your current budget. Take a really detailed look at everything you spend money on — many people are surprised to learn how much little things that don’t really matter in the long run can add up to over the course of a month.

Create detailed projections: Use the NewRetirement Planner to create a detailed budget for your projected spending. When you get specific about your needs and how those will vary over time, you may find out that you are much better off than you thought.

Cut costs: Figure out how to slash both the big (eliminating your car can create sizeable savings) and small costs. Get rid of anything and everything not related to your top priorities.

Assess your lifestyle: Take a look at where you live, who you spend time with and what you do on a daily basis. If these aren’t in line with what is important to you, then make changes that can save you money and help you live a more meaningful life.

Remind yourself about what is important: Write down your retirement priorities and refer to them daily.

It may even be helpful to write a list every day about what you want to accomplish and why.

These simple tasks can help you stay on track.

3. Or, spend more! Just not every month

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Yes, you heard me right. You could perhaps spend more in retirement and still have a secure future.

You see, a lot of people plan retirement thinking that they will keep spending the same amount forever into the future as they do now. However, that is probably not what is going to happen.

You might need and want to spend more right after you stop working when you are relatively young and want to travel or engage in new hobbies. But, your spending will likely drop off as you get older.

Thinking through the details of your retirement spending — and giving yourself some leeway to spend more (maybe just a little bit more) in certain years and less (perhaps much less) at other times might just enable you to retire sooner than you had planned.

The NewRetirement Planner helps you think through detailed budgeting for your future, and you can vary your overall spending as well as your spending in individual categories to get to reasonable projections.

4. Think outside the box (rethink housing)

Senior couple at home
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Many people don’t think much about their homes when creating a retirement plan. However, your home is probably your single greatest expense. Reducing this cost could be one of the best ways to retire securely.

Furthermore, if you own your home, then it is also probably your most valuable asset and one that could be used to help fund retirement expenses.

Rent out your home or a room in your home: House sharing is becoming more common, and Airbnb has exploded in popularity. Renting out a room in your existing home (or your whole home when traveling) — either on a permanent or short-term basis — can be a great way to help fund retirement because it uses an existing resource to generate money.

Downsize: If reducing housing costs and releasing your home equity interests you, downsizing may be a great option for you. When you downsize, you sell your existing home and buy or rent something less expensive. It can be a smaller home or a residence in another community. Learn more in this complete guide to downsizing.

Go teeny tiny: There is downsizing, and then there are tiny homes. If you think that you could live in 500 square feet or less, then a tiny house could simplify both your lifestyle and finances. Is a tiny house the big solution for your retirement plan?

Get a reverse mortgage: A reverse mortgage is a loan against your home equity. However, unlike traditional mortgages, you do not have to pay back the money borrowed as long as you are living in the home. If you want to stay in your existing home, a reverse mortgage is an interesting way to eliminate ongoing monthly mortgage payments and get access to cash to use for retirement expenses.

Hit the road: A few retirees sell most of their possessions — including the home — and hit the road. Could you imagine living in a motorhome or houseboat and traveling during retirement?

5. Pay attention to the big opportunities

Senior woman preparing for retirement
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Besides housing, taxes, debt and Social Security — especially Social Security — are probably the biggest levers you have for making retirement work with inadequate savings.

Debt: Imagine if you could spend the money you are currently using to pay down your debts every month! Being debt-free costs a bit upfront, but it is key to being financially free in the long run. Paying interest on debt is akin to lighting money on fire. Get rid of your debt as soon as possible.

Taxes: Being tax-smart with your retirement plans can mean more accurate projections and more money in your accounts. From where you live to income planning, there are many different ways you can reduce your tax burden.

Social Security: Waiting to start Social Security, up until age 70, can increase your monthly retirement benefits significantly.

6. Find work that feels like play

A bearded senior in a hat sings and plays piano music
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You don’t want to work — working is not “retirement.” However, maybe you enjoy cooking, creating in a woodshop or spending time with dogs. There are more and more ways to make money from these types of hobbies.

If there is something you enjoy doing, you can probably figure out a way to get paid for it.

7. Retire abroad

Happy retirees at home
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The United States, especially certain parts, is an extremely expensive place to live. Retiring abroad can offer adventure and a dramatic reduction in cost structure for your retirement.

There are affordable places to live in all corners of the world — places where the climate might be a little warmer, where the cost of housing might be a little (or a lot) less expensive, and the health care might be more affordable.

But is it realistic to think you can afford to spend your retirement years living in some exotic locale? Not only is retiring abroad plausible, but you can also do it for a lot less money than you might think.

8. Don’t set a date — transition into retirement

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Once upon a time, long long ago, we set a date and planned a big party for retirement. You went to work one day and then never again.

These days more and more of us have a different perspective on a retirement date. Retirees today transition into retirement either by going part-time for a few years, or we find a retirement job.

9. Stay healthy and make good insurance choices

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Some retirees spend more in their lifetime on out-of-pocket health care costs than they earn in Social Security. You can do a lot to cut those costs by staying healthy and by choosing supplemental Medicare coverage carefully.

Shopping around for the best supplemental Medicare plan should be done every year. Plans change. Your health needs change.

10. Have a detailed retirement plan and make smart retirement decisions

Senior couple studying retirement tax information online
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Creating a retirement plan might not seem like one of the most “creative” ways to retire.

Few Americans have a long-term financial plan that includes savings and investment goals and a detailed outline for their retirement finances. So, if you have a plan, you are at least creative.

The NewRetirement Planner makes it easy to create a detailed plan and discover ways to retire securely. Beyond these “creative” ideas — explore how delaying the start of Social Security or optimizing investments can give you a better future. Start by entering some basic information and get some initial feedback on where you stand.

Then you can add a lot more detail and really get an accurate estimate of how much you need.

Best of all, you can try an infinite number of scenarios. See how downsizing, a retirement job or reducing expenses will impact your finances.

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