Time should be used as a tool, not a crutch.
If you are planning for retirement, you don’t have a second to lose, especially if you are middle-aged. The typical retirement age is 63.
If you are fortunate to be healthy, you might live for a long time. The average person is lucky to live until their late 70s. But many people are living into their 80s and 90s.
If you are not careful, you could outlive your own retirement plan.
Here are some tips on how to use the time you have now to prepare for a long retirement.
Make detailed plans and budgets
A successful retirement will not happen by accident. You should spend years creating, planning, and frequently updating your retirement plan and budget.
For example, you need to make a list of potential cities in which to live out your retirement.
Most importantly, you need to know how much money you will need annually to pay your expenses in those cities. Inflation and cost of living expenses increase or fluctuate all of the time, so you need to be apprised of market conditions and revise these plans often.
You should have a weekly, monthly, and annual budget in a perfect world.
And you need to do this for the foreseeable future. Keep meticulous track of every penny coming in and out of your household. Never take it for granted that your retirement fund will cover your expenses, know it.
Make shopping lists and detail household expenses. Only buy what you have on a list and do away with impulse shopping. If you understand your exact annual retirement expense needs and update them as needed, then your retirement should last longer.
Save money now
If you are starting your retirement plan young, then you should get into the habit of saving money every time you get paid.
If you are middle-aged, then it isn’t too late, but you have a lot of time to make up for.
Online bank accounts make it easy for you to automate settings. So, your payday deposit into your bank account can automatically allocate portions of your check into a savings account.
How much money you set aside for savings is not as important as the act.
Use your employer’s plan
Find out if your employer has a retirement plan. And if you have one, use it regularly.
You can contribute tens of thousands to a 401(k) and avoid taxes today on that money. Have an IRA? Then you can contribute that, too.
You should know how much money is in your retirement fund so you can factor it into your retirement plan.
Delay Social Security benefits
Remember when we said you need to plan your retirement expenses and budget exactingly to the letter?
You may need to plan out how your income will pay your expenses by years or decades. So, you may end up working for as long as you can and then wait until your late 60s to retire. Then, you could live on savings, a pension, and perhaps even investment returns.
If you can put off Social Security until age 70, then you will receive 132% of your monthly benefit.
Retire abroad
The effects of inflation are unequal depending on where in the world you live. The effects of inflation and cost of living are less severe if you live in a relatively safe developing country where the local currency is usually weak against the dollar.
Yes, you will have to deal with culture shock, learning a new language, and adapting to a new culture.
But depending on the local currency exchange, you could end up living on $18,000 to $25,000 annually. Lower costs can make even a meager retirement last for decades.
