The retirement plans we consider a part of conventional wisdom were perfected during the times of our grandparents and their parents. They lived in a much different world.
Social Security is no longer enough these days for most retirees.
And by the time you actually reach your retirement age, the world is going to be even more removed from the current situation.
Clearly, you need more unorthodox and offbeat retirement planning to adapt to the changing times. Here are five.
Retire the 4% rule
The traditional 4% retirement rule asks you to spend no more than 4% of your savings during the first year of your retirement and keep adjusting around this withdrawal rate in the subsequent years (according to inflationary trends).
But when this rule was created, the average life expectancy only gave you time for around 30 years max after retirement. With better medical care, life expectancy has increased from 68 in 1950 to around 76 in 2022.
Instead of a 4% withdrawal rate, you may want to plan for a 3.5% rate in your retirement years. That should make the nest egg last a lot longer.
To make it up, you may have to either save more or consider investing differently.
Switch from bonds to real estate
U.S. Treasury bonds used to be an excellent instrument for retirement planning with their bullet-proof reliability and healthy double-digit returns.
While still reliable as a hedge against inflation, bond returns have plummeted in the last few decades. Rates have ticked up, but they could reverse again in short order.
You may want to decrease your bond allocation and consider moving some of the funds into real estate instead. With careful planning, you can expect better returns and inflation-adjusted cash flow.
On top of that, you also have the perk of some tax benefits.
Plan to get back to work
You don’t have to consider 65 as a strict cut-off limit for your working life.
Instead of hanging up your work shoes immediately, consider a slower, gradual transition out of employment. Instead of grueling 10- to 12-hour work days, look up less taxing job opportunities in your specialty.
You can also consider opening a small business of some sort, a passion project you have always wanted to do.
You don’t have to make a ton of money. Side hustles, remote jobs, or freelancing opportunities where you can make use of your skills and experience can yield a steady stream of income.
Get rid of your car
Sooner or later, you are likely to reach a stage where driving is no longer feasible.
Instead of waiting for that to happen, consider ditching your car a few years earlier. If you have multiple cars as a couple, sell one post-retirement and share the other one.
After a few years, you can even consider selling it and using rideshare cabs, public transport, and healthier options like walking and biking.
The savings from fuel and maintenance costs could run into thousands of dollars, all of which can be funneled straight into your retirement fund.
Consider relocating to a cheaper country
The cost of living in the United States is considerably high when compared to some other parts of the world.
Many countries have much lower crime rates, easy access to high-quality healthcare, and better weather to boot.
Thanks to the superior exchange rate of the U.S. dollar, you can afford amenities in these countries at a much lower cost.
Costa Rica, Portugal, Panama, Greece, and Colombia are popular examples of countries where many American retirees are relocating.
