Retirement

5 Common Mistakes to Avoid When Choosing a Place to Retire

old town-bridge-choosing a place to retire

The best thing about retirement that finally you can live anywhere you want. You no longer need to live closer to where your kids go to school or your work. Instead, you can move to a place with beautiful views, a better climate, a lower cost of living, or just a place you were dreaming about.

However, deciding on where to retire can be a difficult task. It will take a lot of time and effort. Unfortunately, one of the biggest mistakes people make when they choose a place to live in retirement.

You need to envision it, set up the priorities, do the research, make a list of areas, and then visit several places before you finally decide where to move in. Besides the financial issues such as cost of living and taxes, you need to consider the weather, amenities, environment, and how close you want to live to your family.

Planning to move in retirement can be exciting and stressful. However, some common mistakes can ruin even the most carefully planned retirement.

To help you make smart decisions, I came up with a list of 5 Common mistakes to avoid:

1. Not visiting enough places before deciding where you want to live.

Have you thought about your retirement priorities?

Do you like to live closer to the beach, golf course or near the mountains?
Do you want to move into an active adult community, a small town, or prefer rural areas?
Have you discussed your plans with your spouse or partner?

Every retirement website recommends doing detailed research before you commit to one place. The internet has lots of information on retirement communities, places to retire, and the cost of living there. It is a good idea to start planning early before you retire so you can avoid the costly mistake of moving around until you find the place you really like.

Start with creating a checklist of your priorities because it would help you narrow down the number of places you want to move in.

It will be smart to visit the places on your wish list if you are still working. Internet research is great, but often you need to see a place with your own eyes. Because while everything looks amazing online, a half an hour drive to the nearest grocery store can ruin the comfort of your daily life and would become a huge inconvenience.

My favorite go-to website is TopRetirements.com

This website provides you with tons of information for the best retirement communities, active adult communities, and places to retire. If you are at the beginning of your research, start with this website to get some ideas and then decide if you are ready for a visit.

When you travel, make sure to explore the town you like as a potential “best place to retire”. Drive or walk around and decide what you like or dislike about the neighborhoods. Take a tour through any active adult communities if there are any in the area.

It is always a good idea to talk to locals and ask questions about their life there. If you are planning to visit several neighborhoods do not forget to take notes so you can refer to them later. Recently I read that some people even prepare pros and cons spreadsheet while visiting retirement communities.

When you visit a place, do not spend all your time near the hotel. Walk around, visit neighborhoods to get a sense of people. For me, the ideal place to move in would be the place with:

Walkable streets
Close to shopping areas
Close to parks or green spaces
Short drive to the beach
Access to public transportation
Proximity to medical facilities

Another tip for avoiding common mistakes is to visit your favorite place during different seasons. Weather is an important factor, and you want to make sure that you like your new home in all seasons.

lake-snow-trees - choosing a place to retire

I do not like hot and humid weather, so even we want to move to Florida I cannot stay there during the summer. Because of that, we would need to have another place where we can escape the hottest months of the year.

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2. Not renting before buying a retirement home.

I am sure you heard the stories about retirees who regret that they did not live in the area before they bought their retirement home. It is so easy to get excited about the community or new development that seems to meet your dreams. But once you settled down it might be too late to realize that you miss the comfort and amenities of your old life.

It is hard to really know a place before committing to that area unless you rent it first. But if you do not want to rent a place before you buy it, make multiple visits during different seasons to get a feel of this area you will call home for a long time.

Renting a home in the neighborhood you like can help you live like a local. Also, renting make sense if you are considering a move to a new lifestyle. In retirement, we are planning to move from the suburbs to a city. It will be a huge change in lifestyle for us, so we want to test it out for a few years by renting an apartment and see if we like it there.

Renting can also be a temporary step if you are not financially ready to buy a house. More retirees are renting these days because they do not want to be in charge of maintenance or yard care.

Buying a home at any stage of life is a major purchase and not a quick decision. It costs a lot to move to a new home, so you have to plan wisely.

It is important to remember that your retirement life can last for 20 or 30 years. Therefore, you need to find a home with an understanding of your long-term needs. It is great If you healthy right now, but it might change in the future. If one of the spouses gets sick, you will want to live closer to the medical center for regular appointments rather than travel for hours to see a doctor.

The best advice is to rent before you buy because you will get fewer surprises in the future. Otherwise, it can be a costly mistake.

3. Moved to be closer to family.

Many people move to be closer to their children and grandchildren when they retire. In many cases, it is a great idea.

But the situation might reverse, and you will be chasing your children around the country if they choose to relocate. You do not want to be in situation when you move to the area and then find out that your family will be moving away.

grandma with granddaughter baking - moving closer to family in retirement

4. Not doing your due diligence before moving to a new place:

Moved to the wrong environment.

That is a common mistake for many retirees. That is why you need to make sure that the location meets all your needs before you move in.

Everyone knows that staying socially active makes you happier and healthier in retirement. But where are you going to meet new friends? Does a new place have social events, clubs, or gathering places? Is it close to a coffee shop, pool, library, or movie theater?

We live on the east coast. Here everything is close enough if we want to drive for a few hours to get to another state or town. But if we move to Texas or Arizona, I will miss the variety of New England scenery and proximity to a familiar environment. Everything will be far away if we want to have a change of scenery.

If you are planning to move to one of many retirement communities, make sure that it will be a good fit for you. I would recommend renting a unit and spend a week there. Go to the restaurant where everyone eats and see if you like the food and ambiance. Go to the games room, swim in the pool, and talk to residents about life in the community.

The best advice is to find a place that matches your lifestyle when choosing a place to retire. Hence, do not move to a rural area if you love going to museums and theaters.

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No access to good healthcare.

Keep in mind that access to good healthcare and medical facilities is a must when looking for a place to retire. When you are in your 60s and 70s, you are still active and healthy and probably need only routine doctor visits.

But as you grow older, you will need access to retirement facilities, home care providers, and transportation for people with disabilities. And you do not want to move to another place in search of better healthcare in your late 80s.

5. Not considering the design of your retirement home.

That is a common mistake for many retirees when they buy for today and not for tomorrow. You are healthy and active today, but unfortunately, your mobility will decline with age. That is why you need to consider the design of your home with the idea of how it might change in the future.

Everybody loves living in a new two-floor modern-designed home. But what happens if one of the spouses will lose mobility and will be in a wheelchair? How will you go around the stairs? It will be stressful to start looking for a single-level house while trying to sell and move out of your brand-new home.

Have you thought about if your house is accessible for your future needs?

You might not need it right now, but life can change very quickly in 10 or 15 years. It will add a lot of stress and money if you need to renovate your home later to fit your physical abilities.

The important thing to remember that if you are moving to a new place make sure that your house is a comfortable place to age. In the end, it can be expensive and difficult to remodel a place with lots of stairs, a second-floor master bedroom, tall kitchen counters, narrow doorways, and more.

Final Words

Choosing a place to retire may be one of the biggest decisions you will ever make. Hence, do not make it in a rush. Take your time and choose wisely.

But do not be discouraged by the amount of work you have to put in upfront. After all, you will benefit greatly by living and enjoying the retirement of your dreams.

What are your top retirement mistakes to avoid?

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Checklist for Retirement Planning in Your 60s

by Maggie Leave a Comment

woman making notes at table outdoor - retirement planning in 60s

When you are in your 60’s you know that your retirement is around the corner. Getting closer to the retirement date can be both exciting and stressful. Everyone wants to have a happy and comfortable retirement.

But when you have a limited number of remaining years you need to take time to understand your retirement picture. You do not want to be one of those people who want to retire, but when that day finally arrives, they just let it happen. You want to be smart and invest time in planning and preparing for a big day. Before you take the plunge make sure that you are ready!

Here is a checklist of helpful steps to take for people in their 60s who plan to retire in the next 5 to 7 years:

1). Understand your retirement lifestyle.

Before talking about finances, I want you to answer the following questions:

Where do I want to live in retirement?
What do I want to do in retirement?

Answering these questions is important because it will determine the cost of your retirement. Most people already have a vision of their next phase of life. But not everyone goes into the details of planning it.

Think about retirement in stages. Your early years of retirement are going to be the most active. Then you will settle down and face a slowdown in your activities. Your retirement lifestyle will determine the cost of your retirement.

For example, I love to travel and have a long bucket list of places I want to see and countries to visit. plan on traveling the world when we retire. Once we retire, we are planning to spend half a year abroad traveling. That will take a significant amount of money to cover our travel expenses. But we already have determined a retirement budget for the first 5 years of our travels. Eventually, we will slow down and start spending more time at home. Going on one or two big trips a year will be all we can afford to pay for the cost of traveling.

Being in your 60s is an ideal time to look at your retirement plans. You are close enough to retirement to have a realistic idea of how you want to spend your golden years.

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2). Finalize your income and expenses.

Once you have a picture of your retirement lifestyle you need to finalize your financial assets and see if you have enough money saved to pay for this life.

Income

Financial experts suggest that you need about 80 percent of your pre-retirement income to maintain the same standard of living in retirement. Suppose my current annual income is $60,000. Multiply that number by 80 percent ($60,000 X 0.8 = $48,000). So, I will need around $48,000 in retirement to live the way I do today.

This number is a good rule of thumb if you do not plan on making any major budget changes when retire. However, not all retirees spend less in retirement. And if I have expensive hobbies like traveling, I will need a higher number.

Now when you are close to retirement, the rule of thumb “80 percent of pre-retirement income” should be replaced with real numbers. This number should include your daily living expenses and the money you want to spend on hobbies and activities.

Sources of retirement income:

When you are working you probably have a single employer and a single source of income – your salary. In retirement, everyone has different sources of income. As a retiree, you receive income from multiple sources:

Guaranteed income:

Social Security
Pension
Annuity – a guaranteed income you must purchase yourself

Other sources of income:

Part-time job
Rental income
Business
Dividends

Income from your retirement funds:

Tax-deferred accounts – 401(k), IRA
Tax-free – Roth IRA, Roth 401(k)
Taxable investment accounts
Taxable bank checking and savings accounts

While working, you receive a paycheck regularly – probably every two weeks. When you retire, you might receive income monthly, quarterly, annually, and even irregularly. Getting a clear picture of your retirement income should help to make sure that you have enough money to cover all your living expenses.

Expenses

I know nobody likes to read about budgeting. But the best advice is to create an estimated retirement budget based on your current and future expenses. You might have a general idea of what you spend now. But you will be better prepared if you have a clear picture of your expenses now and how that might change in the future.

When you retire you do not need a lot of things that you did when you were working. The costs of commute, take-out lunches, and business clothes will go down. But you will start spending more money on travel, hobbies, and activities. And your medical expenses will increase with time.

lake-boats-flowers-retirement planning and retirement expenses

It is important to include big-ticket expenses into the retirement budget as well. Paying for a wedding, buying a new car or a lake house will require a significant amount of money withdrawn from your retirement funds.

If you do not know how to create a retirement budget or organize your finances for retirement, I recommend reading my articles:

3). Minimize your debt.

When you are in your 60s make it a goal to pay off your credit card debt, student loans, car loans, home equity loans, and any personal loans before your retirement date. Do everything you can to retire debt-free and even pay off your mortgage if possible.

When you stop working and start living on a fixed income you will need to stretch those retirement dollars as far as you can. How can you enjoy your retirement if you must spend a portion of your retirement income to make mortgage or debt payments each month?

Credit cards

If you are carrying a high-rate credit card debt you are putting a lot of pressure on your finances. There are two most popular debt payment strategies – the snowball strategy and the avalanche strategy.

The snowball strategy works by paying off the credit card with the smallest balance and then working your way up until all credit card debt is settled. The avalanche strategy allows you to pay off your highest interest rate debt first and then work it down. I recommend focusing on your highest-interest debt first because the longer it takes you to pay it off, the more money you will pay towards interest.

And if you can help it, do not add any more debt to the pile while paying off old debts.

Over the years Roman and I have accumulated $170,000 in debt – car loans, student loans, construction loans, and medical expenses. It took us 21 years (from 1999 to 2020) to pay them off. The only debt we have left is the mortgage. We try to increase our payments towards the principal. Recently, we refinanced but I do not think we will finish paying it off in full before we retire.

Mortgage

When you are in your 60s, one of the smartest things you can do is to pay off your mortgage before you retire. A mortgage-free retirement is usually best because you can spend more money on the fun stuff. Retirees often have to withdraw money from their retirement funds to cover their mortgage payments.

Unfortunately, those withdrawals typically trigger more taxes. That is why it is better to pay down your mortgage while you are still working, so you can keep your housing expenses low.

Look at your mortgage balance and try to figure out how much extra you can put toward your mortgage each month. Those extra payments can reduce your principal balance significantly. Also, instead of sticking with the traditional monthly payments, you can start making bi-weekly mortgage payments. In addition to that look into refinancing your mortgage to get a lower rate and to reduce your monthly payments.

However, for many people paying off the house is not financially possible. When a payoff is not feasible, you should reduce mortgage debt by refinancing it. We recently refinanced our mortgage with AmeriSave Mortgage Corporation at 2.5 percent. It helps to lower our monthly payments and save us $500 a month.

When you are in your 60s, getting out of debt should be your priority. At this age, you have to make the most of your remaining years in the workforce to increase your retirement savings within the next 5 to 7 years.

I recommend reading my article:

How to Pay Off Debt Before You Retire

4). Maximize your retirement savings.

When you are only a few years away from retirement, being short on retirement savings can be problematic. The best option is to start spending less so you can put more money into your retirement savings.

Whenever possible, increase your retirement contributions up to the maximum allowed in retirement plans such as 401(k), IRA, and Roth IRA.

The 2021 contribution limits are:

$19,500 for 401(k) retirement plans. And if you are age 50 or older, the catch-up contribution is an additional $6,500. So, you can save a total of $26,000.
$6,000 combined contribution for traditional IRA and Roth IRA. And the catch-up contribution for people age 50 or older is $1,000. So, you can save up to $7,000 with your pre-tax money (IRA) and after-tax money (Roth IRA).

When you are getting closer to retirement, maximizing your traditional 401(k) and IRA accounts is important but not always enough. While you are still working you can make it a priority to save even more money in your Roth IRA account, emergency fund, and perhaps taxable investment funds if possible.

Another way to increase your retirement savings is to work longer. The goal is to make the most of your working years. You need to maximize the time you have left. Earning an income for a few more years could improve your financial security in retirement.

I am sure you may not like to hear this, but the fastest way to save more money for retirement is to cut your expenses. If you start practicing how to curb your spending and live on less money today, it will make your life easier in retirement.

Many people in their 60s enjoy the life of empty nesters. When the kids are gone, they start spending more on luxuries. It is easy to get used to a luxurious lifestyle, start spending more and saving less. However, it will be tricky to save money and even to retire if you let your spending get out of control. After all, the less you spend the more you save.

5). What is your retirement income plan?

After decades of earning and saving money for retirement, you need to shift gears and start spending what you have saved. And being just a few years away from retirement date is the best time to find out how much income you can pull from your nest egg.

There are three sources of your retirement income:

Social Security
Pension income (if you are the lucky one)
Income from your investments and savings

When you stop working you need money to pay for your retirement expenses. After you retire, you will receive Social Security payments. But that will be only a portion of your retirement income. You will start receiving payouts from your retirement savings.

But you will have to figure out a strategy of how to withdraw money from your retirement funds. This withdrawal strategy should give you the income you need from your first month of retirement through your 80s or 90s.

The “4% rule” is a well-known rule of thumb and a good starting point. According to this rule, you can withdraw 4% of your account balance.

For example, if you have $500,000 saved in retirement funds you can withdraw 4% of that amount – $20,000 in the first year of your retirement. You can adjust that number every year for inflation but following this rule should help you not to run out of money for at least 30 years.

Though, you have to be aware that there are a few problems associated with following this rule:

Return risk – the risk of earning smaller returns than it was in the past.
Longevity risk – the risk of living a long time and running out of money at the end of your life.
Series of return risks – the risk of a market downturn during your early withdrawal phase.

Even it is not perfect, the 4% rule is a good starting point you can adjust with time.

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6). Decide how to cover medical expenses.

You will become eligible for Medicare at the age of 65. If you plan to retire before age 65 you will need to find a separate plan to cover your medical expenses.

Your health insurance provided by your employer ends when you stop working. Even though your current employer promise to cover your health insurance in retirement does not mean they will not change their mind in the future or reduce coverage significantly. Thus, you will need to find and buy your health insurance coverage. Individual health insurance is expensive and could cost more than $1,000 a month. Make sure to shop around for the best prices.

Even being eligible for Medicare brings its own set of challenges because it does not cover all medical expenses. Medicare does not cover premiums, deductibles, co-pays for doctor visits, dental and vision care, long-term care, personal care, and other expenses. This means you need to include healthcare costs in your retirement budget.

7). Protect yourself and those you love.

Have you thought about how to protect yourself as you age and how to help your family care for you if you need it? When the time comes that you need assistance who will manage your finances, your medical care, and your regular day-to-day life? I understand that these are difficult topics to discuss. But it is a part of reality to grow old. And if you love your family you will plan for it, so your loved ones will not struggle and may have to scramble to care for you.

I write often in my articles about the cost of medical expenses in retirement. I want to remind my readers that healthcare is the second biggest expense in retirement after housing and you need to plan for it. Medicare is not free. It does not cover all your medical expenses and does not pay for long-term care.

Long-term care insurance is the most recommended way of planning for future expenses. It will cover nursing homes, assisted living facilities, and in-home care. It will help you not to be a financial burden on your family if that time comes. And you do not want to leave your husband or wife with nothing because the entire nest egg was used up taking care of you.

8). Think of tax strategies.

In retirement, we still need to pay taxes, but not all sources of income are taxed the same.

American dollars on a table - prepare tax strategy in your 60s

Withdrawals from tax-deferred accounts such as 401(k) plans and traditional IRAs will be taxed as an ordinary income. Withdrawals from Roth IRAs and Roth 401(k) plans will be tax-free. If you want to withdraw money from taxable investment accounts, you will have to pay capital gains taxes.

In addition to taxes, you need to remember about required minimum distributions (RMD). You will face this requirement when you reach the age of 72. By the US tax law, you are required to start taking withdrawals from your retirement accounts such as 401(k) and IRA (excluding Roth IRAs). The amount you must withdraw will be determined by the IRS. If you have more than one retirement account, you can withdraw money from each account or total RMD from just one account.

It is important to remember that your RMD withdrawals might push you into a higher tax bracket.

Think about what tax strategies will work for you the best. If it makes more sense, you can roll your assets into Roth IRA before you reach RMD age. Another option is to start taking withdrawals from your retirement accounts before RMD kicks in so you would not face the sudden jump in taxes.

9). Reallocate your investments.

The last few years have been volatile years for financial markets. Many people pulled money out of the stock market. When you are close to your retirement date is tempting to stay away from stocks to reduce the risk of losing money in your retirement funds.

But keep in mind that stocks provide growth. And investing in growth is important at this stage of life. If you retire at 65 and spend 20 to 30 years in retirement, you need to have enough growth to make your money last that long.

Put it on your checklist to review your asset allocation and make sure your portfolio is diversified and invested for growth. What I am suggesting is to have a balanced mix of stocks, bonds, mutual funds, and other assets that fits your retirement goals.

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Final Words

Your 60s is a decade full of transitions. Perhaps your kids are out of the house, and you are thinking about downsizing. Perhaps you would like to relocate to a warmer climate. Medicare will kick in at 65 and you may also find yourself ready to leave the full-time job that defined so much of your daily life. Somehow you have to navigate the various transitions in this new period of your life.

Regardless of how you plan the transition to retirement, your most precious asset at this stage of life is your attitude. How you envision your future is everything. A positive attitude will carry you forward into the future and your golden years.

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Finding Your Purpose in Life in Retirement

by Maggie 4 Comments

woman-laptop - finding purpose in life in retirement

One of the challenges of retirement is finding your sense of purpose in life.

While we are working, the responsibility and commitment of work give us a sense of purpose and meaning. When we retire, we look forward to leading a more relaxed lifestyle. But many people often miss the feeling of being valued in the workplace.

The important thing to remember that just because you have retired from work does not mean you are retiring from life. Retirement is a huge transition where you have to refocus your energy into something different than your career. Think about the new lifestyle you will be walking into as well as if you are prepared for it.

Purpose and Meaning

In the past several years I have been talking to retired friends and reading blog posts about what has given retirees purpose and meaning in retirement. And what I have learned that finding a new purpose in life is a major undertaking. It takes quite a long-time to find how to replace a work-related purpose with something new.

Most people believe that preparing for retirement is all about saving money and building wealth. This is true because money and financial independence are a huge part of a solid retirement plan. However, it is not the only one. Understanding your personality and creating a plan for what to do with yourself may be just as important as saving in your 401(k).

So how to find a new purpose in life? Think about how to refocus your life by writing down your interests and things you want to do in retirement.

Some people might find their purpose in doing meaningful work like being a volunteer while others might find that their purpose is to help family and friends. Some people find their purpose is going away on a spiritual journey or helping others on a similar path.

Think about who you want to be in retirement and ask yourself:

What special talents or interests do I have? Am I a creative type?
Do I have a dream that I want to pursue?
What do I want to achieve?
What skills I can use to benefit other people?
Do I like to work at something I am used to, or would I prefer to face new challenges?
What would I regret not doing if I die?

As you gather your thoughts answering those questions, you can begin to outline what your new purpose in life might be. Look at retirement as a time for exploring, developing new skills, and trying out new interests and activities.

Pick one or two things from the list below and discover if they bring a sense of purpose to your life in retirement:

1. Hobbies in retirement

I believe that everyone has some interests that they were forced to put on the shelf during their working years. But retirement gives you a great opportunity to start over again by pursuing your passion. You should always stay active once you retire. Do not consider yourself as ‘retired from life’. Refocus your energy on learning something new and more interesting than your previous job.

People still enjoys traditional hobbies such as cooking, reading, gardening, coins collecting, building models, even antiquing. If you are not sure where you want to start, compose a list of old hobbies you have enjoyed but had to stop and what hobbies you have wanted to try. Try to choose hobbies with a good mix of activities – physical and mental ones. And try something outside of your comfort zone. Also, it might be fun to try something new with a friend or a family member.

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2. Travel in retirement

These days traveling is a number one goal for most retirees. Many people look forward to traveling after they retire because you are no longer is constrained by the number of vacation days you can take off. You can go whenever you want and for how long you want.

Many people (including myself) looking at retirement as the best time of our lives, a time for fun, adventure, and travel. I believe that one of the biggest benefits of retirement is the freedom to explore the world.

I have found it useful to create a bucket list. That is a list of things I want to do and see in our local area and other countries. My bucket list is always get updated with the name of new places, activities, recommended tours, dates of future travels, and more. Roman and I feel excited when discussing our travel plans, and the places we want to visit.

Today, the fact that people live longer has produced a new generation of adventures – senior travelers. They are bold, resilient, and enthusiastic about fulfilling their childhood dreams. Professional obligations, family life, and financial concerns prevented them from actually doing it. But retirement brings freedom and they do not wait any longer to explore the world.

3. Health and fitness in retirement

Finding your sense of purpose in retirement often comes with staying in good health.

park-woman -bicycle-purpose in life in retirement

During the years of working and raising a family, it is so easy to let your fitness slide. There is not enough time for everything so many of us allow our weight and diet to decline. But once you have retired you will have plenty of time to improve your physical health and fitness.

Stay in shape.

There are still many retirees who spend days lying on a couch watching TV and snacking. Some people gain weight during retirement because they are not active, and began to eat more out of boredom and depression. Overweight and lack of exercise put retirees at great risk of many chronic diseases such as diabetes, stroke, cancer, and heart disease.

But you can get into shape with a healthy diet and regular exercise. Exercise can take many forms – jogging in the mornings, hiking in the woods, biking to the grocery store, taking yoga classes, swimming in the lake. Try to choose an exercise activity that you enjoy so you can stick to it for a long time.

There are many books and videos that you can use for working out from the comforts of your home. But if you want to exercise with others you can join a gym and take group fitness classes. Do not be afraid to try something new such as Pilates, Kickboxing, or Zumba.

Another good idea for staying in shape is to hire a personal trainer and learn new techniques for improving your overall well-being.

Stay in good health.

Maintaining good health is often a number one goal in retirement. Do not wait until something is wrong to visit your doctor. Take a preventive approach and have your regular health check-ups and screenings, so if any problems get caught early you can do something about them.

4. Working in retirement

If you still find that you miss working, there is no reason not to make work your new hobby as long as you find it enjoyable and not stressful.

Part-time jobs

Working part-time in retirement can be a great way to feel fulfilled. Even though your official full-time career has ended, it does not mean you have to stop working completely. The surveys show that many retirees prefer to work part-time jobs to stay busy, socialize with people or simply pursue their lifelong passion.

The Bureau of Labor Statistics predicts that a growing number of the labor force (164 million people by 2024) will have 13 million workers aged 65 and older. Many retirees have enough money to cover their living expenses in retirement. But many others who prefer to take on a part-time job for extra income or to cover the shortage of retirement savings.

There are plenty of part-time jobs for seniors including tutoring jobs, consulting jobs, service jobs, and more. Part-time jobs provide you with extra income and still allow you to enjoy more free time, travel time, and indulge on your hobbies.

Here are some options for the part-time jobs for retirees from the AARP article:

Top 25 Part-Time Jobs for Retirees

Small business

If you are planning to start your own business in retirement, you are not alone. According to statistics, the highest rate of entrepreneurs is in the 55-64 age group. For many people, being retired does not mean never working again. The most popular types of business these days includes consulting services, and freelancing.

coffee shop - purpose and meaning in life in retirement

Whatever business you are planning to start make sure you do something you passionate about. To start a new business will require a lot of time, money, and effort over a prolonged period. You need to be passionate about the product or service you are offering to make your business succeed. Otherwise, you will lose the excitement when faced with challenges fast and will not be able to carry on.

5. Giving back to the community in retirement

Many people choose to give some of their time to charity work and volunteering. Many of us feel the desire to give back to the world in gratitude for the opportunities we had in life. This is a great way to find your purpose in life and stay busy and valued. You will have a chance to meet new people and feel good about yourself while contributing to the community.

Countless groups and organizations are looking for an extra hand and might not have money to hire the help they need. If you need to find an organization, think about what you are passionate about and what matters to you the most. You can volunteer by sitting on Board of Directors, helping renovate housing, tutoring children, or organizing events and fundraisers.

Some great options are to volunteer at a homeless shelter, animal shelter, local hospital, church, and library, or teaching to share your knowledge. Offering your time and assistance to those in need will give you a great sense of purpose and making the world a better place to live.

One of my friends is passionate about helping seniors in her local community. She teaches nutritional training class “Successful Aging” at several senior centers. Currently, she is focused on raising funds for the creation of an Outdoor Recreation Area and Shade Pavilion so older people will spend some time outside in nature and feel less isolated and lonely.

6. Caregiving in retirement

Many people choose to become a caregiver to take care of aging parents who need help with their lives. I know a few neighbors who are taking care of their grandchildren and a friend who retired early to become a caregiver for her disabled brother.

These situations are very common. We all hope for long and healthy lives for our family, but there are times when our loved ones need our help. Becoming a full-time caregiver is not an easy decision and it may affect your lifestyle. But most caregivers take on this new role out of love and good intentions.

Final Thoughts

Retirement is not a one-time event. It takes place over time, and we need to develop new interests, explore different parts of ourselves, and form new identities.

Everyone is different. Your retirement should be about you. And what other people find rewarding and enjoyable might not appeal to you. So, keep looking until you find something that you are passionate about and it adds meaning and purpose to your retirement life.

We would love to hear from you! Do not hesitate to share your thoughts about finding a sense of purpose in retirement in the comments below.

Do not forget to share this article if it helped you!

5 Smart Alternatives to a Traditional Retirement

by Maggie 4 Comments

lake surrounded by mountains - alternatives to traditional retirement

Retirement is one of the most important transitions we face in life, and it includes a huge change in our lifestyle. After working for several decades, building a career, and raising a family we will have to meet each day with no schedules and a lot of time on our hands.

But the landscape of retirement is changing. Not everyone wants a traditional retirement. Not everyone wants to work until their mid-60s, then relocate to a southern state and play golf most of the days. Some people realize they do not want to wait that long to start a life of leisure since we do not know where we will be physically and financially at that time.

The good news is that retirement can be whatever you want it to be with a realistic plan in place.

Here is a look at 5 smart alternatives to traditional retirement.

1). Early Retirement

Early retirement is used to be a privilege of wealthy people. But right now, more people are planning to get out of the workforce before they reach their full retirement age. Early retirement is becoming a popular financial goal even for people in their 30s.

The FIRE (financial independence retire early) movement encourages frugal lifestyle habits. If you want to reach financial independence and retire early, you need to learn how to save, spend and invest smart ways. It takes years of sacrifice, discipline, and careful planning to reach this financial goal. But if you want to achieve financial independence at an early age you can enjoy your dream life much earlier.

young woman at the table with a phone - alternatives to traditional retirement

For example, if you want to stop working at 40, you need to plan for a long retirement. You need to come up with at least 40 years of savings to cover your living, medical and other expenses. And if you want to save enough money to retire early, you need to change your spending habits and commit to a very frugal lifestyle.

Many millennials who are part of the FIRE community aim to live on 50 percent (or less) of their income and the rest goes to savings. They cut on their living and personal expenses for years to save enough money. Working out how to retire early can be challenging. That is why it is important to create a plan and then take it one step at a time.

Steps to take if you want to retire early:

Determine your lifestyle. What do you want to do when you retire early?
Evaluate your current financial situation. Calculate how much money you have saved, how much debt do you have, the total value of your assets.
Estimate your total savings needs. Figure out how much money you will need to support your lifestyle when you stop working for a paycheck. As a rule of thumb, you should have 25 times of your annual spending before you retire.
Make adjustments to your budget. Cut your expenses by downsizing, moving to a cheaper area, buying a used car, eating out less, and more.
Get rid of debt. Pay down debt using either the snowball or avalanche method.
Invest your funds. You should invest your savings for growth so you can generate income from your money.

But I have to admit that early retirement is not realistic or achievable for everyone.

Related Content:

2). Mini-Retirement

Not everyone wants to make lifelong sacrifices to quit their job at a young age to live a life of leisure. However, not everyone wants to wait until the mid-60s to start enjoying their retirement.

Hence, another great alternative to a traditional retirement is a mini-retirement.

A mini-retirement involves taking a short break from work or a series of short breaks. These breaks may be short as a few weeks or months, or longer as a couple of years. Basically, you take a mini-retirement when you want to get a break from your career. Also, a mini-retirement can be a solution for people who are tired or feeling that they are not taking the right path in life.

You can use a short break from the grind of a full-time job to explore the world, spend more time with kids or just reflect on what you want out of life.

But like everything else in life a mini-retirement requires a lot of planning. You need to establish why are taking a break and how to fund your time off from work, otherwise, it can become a disaster.

Figure out how much time you want to take. This period can be between one to two months, or maybe between six months to one year.
Estimate your living expenses. Calculate how much you need to spend on mortgage or rent, bills, insurance, food, and other daily expenses. If you will be traveling, estimate your travel expenses and add the cost of traveling to your mini-retirement budget.
Establish your budget. Combine your living and travel expenses and multiply by the duration of your mini-retirement.

Even so, a mini-retirement sounds very attractive it might be not for everyone. It is much easier to take a mini-retirement or break from work if you are a freelance worker, contractor, or a digital nomad.

Related Content:

3). Phased Retirement

Studies show that people aged 60 and older will prefer to gradually transition into retirement by working fewer hours.

The whole idea behind a phased retirement is to not wait to live your life or put off your dreams until old age. People want to spend more time with the family. They want to pursue personal interests or hobbies.

Most people want to enjoy their life while they work and not sacrifice their best years for the pure purpose of building wealth. However, only some people want to completely stop working because work plays an important role in a balanced and fulfilling life. Instead, more people prefer to ease into retirement by shifting from full-time to part-time work.

Key issues to consider that will affect your finances and lifestyle:

Talk to your employer and find out the policies on part-time work and benefits. Depending on how many hours you want to work each month, you could be eligible for retirement benefits and health insurance.
Adjust your budget. Part-time work means less income and savings. Come up with a plan on how to pay bills and living expenses on a reduced income.
Consider your job options. Review your skills and knowledge and think about what jobs will help you use them.

Related Content:

4). Semi-Retirement

You work hard on your career growth, but at some point, you want to have more time with your spouse and young kids. Or maybe you need to take care of aging parents. How to plan for retirement when you can still continue to work, but have more time with your family?

women with a small child in hands - semi-retirement

Semi-retirement can be an ideal solution for those people who want to enjoy the benefits of a retirement lifestyle without completely giving up their jobs.

If you cannot reduce your hours at your current job, you can try to find a part-time job with another company. The best part is by working part-time you can continue to earn your income, increase your savings, get health and other benefits. Working only part-time can provide a perfect lifestyle balance for many people. It reduces the financial pressure on your retirement assets, keeps your mind sharp by new challenges at work, and yet allows more leisure time.

How to plan for semi-retirement:

Think about what to do with your time. Write down your plans on a piece of paper. Make a list of your goals the same way you make a ‘to-do’ list.
Consider a career in a new field. Try to find a job that matches your interest. Consider switching to a second career when you can use your existing skills like becoming a consultant or a tutor.
Start a side hustle. Starting a part-time hustle like blogging could be a rewarding career change.
Think about health coverage. You will not be qualified for Medicare if you are before age 65. Think about finding part-time work that includes health insurance. It also may be possible to get on your spouse’s insurance.

5). Never Retire

Some people already know that traditional retirement is not a final goal for them. After all, a lifestyle of leisure is not appealing to everyone. They love their jobs and prefer to continue working as long as possible. And if you are in a good health and taking care of yourself you can work as long as you can. You still need to continue saving for retirement in case of a health issue, a family emergency, or a sudden layoff. Also, you should have a plan for when to take Social Security and retirement distributions.

Traditional Retirement

If none of the above-mentioned alternatives appeals to you, there is always the traditional retirement route. It means working most of your life and retiring at the full retirement age around your mid-60s. At this age you will be covered by Medicare, start living off the combined income from Social Security, pension, and your retirement savings. The good news is that with years of working and diligent retirement planning you could still enjoy a comfortable retirement.

Find your path. Now that you have more time, there is a whole new world out there waiting to be discovered. Think about whether you want to spend your free time doing something similar you did before retirement, or if you want to try something different. Write down a list of interests and activities that brings you joy even some of them you might put on the back burner for a while. Do not forget to include in your list new things you like to learn.

All those things we regret not having time to do during our working years can act as an inspiration when we transition to retirement. There are endless possibilities to explore once you have time and the freedom of retirement.

Final Words

Retirement is no longer a one-size-fits-all matter. There has been a huge transformation in the types of retirement. With changes in the working environment, people structure their type of retirement to have a lifestyle they really want to live.

Have you thought about alternatives to a traditional retirement? Share your thoughts in the comments below.

Do not forget to share this article if it helped you!

15 Ways to Live on Less in Retirement

by Maggie 4 Comments

older couple walking - live well on less money in retirement

Do you know how much money you need to live on in retirement? Have you been honest with yourself?

Everyone wants to have a happy retirement without the worry of not having saved enough or spending your savings too quickly.

Before you retire, look at your current expenses and see how much you will need when you leave the 9-to-5 world. Be honest about your retirement savings and calculate if it is enough to support you for the next 20 or 30 years.

Fortunately, a happy retirement does not always come with spending a lot of money. It only takes several steps to reduce retirement expenses so you can live well on less money.

Explore 15 ways to live on less in retirement:

1. Stop saving for retirement.

Once you retire, you no longer must save for retirement. If you have been saving 10 or 20 percent of your paycheck for decades, you no longer have to do that.

You do not need to save thousands of dollars to your 401(k) or IRA retirement accounts each year anymore. This chunk of money can be eliminated from your budget. It is time to start spending your savings.

2. Save money on commute.

Once you retire, you do not need to commute to work every morning. This means saving money on car parking, maintenance, and gas.

Every year we spend over $6,000 on commute including parking, maintenance, fuel for 2 cars, and T-passes for the subway to get to Boston. When our commute is over, we can save a lot of money every year.

3. Do not buy expensive clothes.

When you stop working and spend many hours at home or in your garden, there is no need for ‘a dress to impress’. Say goodbye to your business clothes and wear something comfortable for your new daily activities.

I know that I will save some serious money when I stop buying expensive clothes, shoes, and accessories for work. My new outfits will be something simple and comfortable and what I want to wear. The best part is that I will spend less on clothes and more money on fun stuff, travel, and activities.

4. Downsize to a smaller home.

Homeownership is one of the most expensive categories on the retirement budget. That is why downsizing to a smaller home is a smart way to lower your monthly living expenses.

Moving to a smaller home will help to reduce utility bills, cost of maintenance, repairs, and cleaning. If your current home is paid off, you can use available home equity to buy a smaller home without taking on another mortgage. Moreover, moving to a smaller home will save you more money in the long run.

If you do not plan on downsizing, consider other housing alternatives to reduce monthly expenses:

Rent out a room in your home.
Rent out your garage.
Take a roommate and split the mortgage payment.
Make money with Airbnb and rent out extra rooms in your home.

5. Relocate to a low-income or no-income-tax state.

Moving out of a high-income tax state in retirement is one of the best ways to stretch your retirement funds. But you still have to ask yourself if it worth it. Probably it does not make any sense to move If you do not pay a lot of state income tax today and do not expect to pay more when you retire.

Living in a high-income tax state like Massachusetts, we paid a maximum of $6,200 over the years. I am not sure if it worth it for us to sell our home, hire movers, find a new place to start a new life somewhere else only to reduce a tax bill.

However, if we paid $20,000 or more in state income tax and expect to pay the same amount in retirement, I would plan on moving to a low-income or no-income-tax state.

Article: Perils of Moving to a No-Tax State

6. Reduce insurance premiums.

home office - live on less money in retirement

Before you retire, you should plan how to live on less money. One of the ways to cut your retirement expenses is to reduce insurance premiums. You can ask your home insurance company for a senior discount.

Many home insurance companies provide discounts for retirees because they spend more time at home which reduces the risk of fire, flood, or robbery.

Another way to reduce your insurance premiums is to tell your car insurance company that you will no longer be driving to work. The more you drive, there are more chances for you to get into an accident.

Daily commuting is a big risk factor because car collisions typically happen during periods of heavy traffic. When you retire, contact your car insurance company, and ask them if you qualify for a low-mileage discount.

7. Downsize your vehicles.

We own 2 cars, and last year we spent $4,950 a year (or $412 a month) on license fees, insurance, maintenance, repairs, and gas. We even had spent more money when our cars were financed with loans.

Owning 2 or 3 cars is often required when you live in the suburbs and work in the city or have kids. But when you retire, you do not need to have 2 or 3 cars. It stops making so much sense and hurts your budget.

To live on less money in retirement, you should downsize to one car or no car at all if you want to move to the city and use public transportation.

8. Reduce your bills.

There are many ways to reduce your retirement expenses. One of the most popular ways is to get rid of cable and cancel your landline phone service.

I have to admit we still have a landline phone, and it costs $30 a month or $360 a year. When we retire and start living on a fixed income, it will be a lot of money to pay for something we do not use often anymore.

I know that we should cancel our landline and use only cell phones. In the modern era of texting, Facebook messaging, and emails, people do not call each other as they used to do.

We have cable TV, and our last year bill was topping at $75 a month or $900 a year. I struggled with the question: “Should I get rid of cable?”

Honestly, we do not watch hundreds of channels on TV, and I do not like to be interrupted with commercials every 10 minutes. Internet streaming service like Netflix and Amazon Prime costs much less and offers more entertainment.

So far, we did not get rid of cable but changed from Verizon Fios TV 300+ channels to Verizon Fios TV plan with fewer channels for a price of $55 a month or $660 a year.

If you plan to live on less money in retirement, you should not overpay for things you do not use often.

9. Find free activities or use senior discounts.

As a retiree, you can find many great things to entertain yourself for less money. There are many free local summer concerts, fall festivals, events at libraries, or social activities at a senior center.

Many museums offer free days or evenings for visitors. When you do not have to work, it is much easier to visit museums on a weekday with a smaller crowd.

Using senior discounts is another way to live on less money and still enjoy your retirement. You can ask for a senior discount at many places:

gym membership
local museums and concerts
state parks and beaches
golf courses
restaurants
local stores and supermarkets

Article from AARP: 10 Places to Ask for Senior Discounts

10. Find travel deals and travel off-season.

flowers-lake-mountains - travel off-season

Traveling is the number one goal on the retirement bucket list for many baby boomers. But traveling is expensive. It includes hotels, air tickets, restaurant meals, rental cars, entertainment, tours, and more. But If you want to travel on less money, and still fulfill your retirement dream, look for travel deals or travel off-season.

In retirement, it is much easier to save money on travel because you have the freedom to travel when the best deals are available. Start with looking at cheap accommodations. Instead of paying for the hotels, look at websites like Airbnb, VRBO, or Vacation Rentals to see what they have to offer at your destination.

Airbnb

VRBO (Vacation rentals by owner)

Vacation Rentals (Home to Go)

Check airline prices and find the cheapest flights. Sign up for free price alerts. Be flexible on dates and be flexible with your travel destination. Fly out early because the lowest price flights are the first flights in the morning. Fly on the cheapest days of the week – Tuesday, Wednesday, and Saturday.

Look for senior discounts to museums, concerts, parks, and other tourist attractions. With available discounts and deals, you can save a lot of money and travel for less.

If you like to travel but concern about spending too much money, do not travel far. Drive a few hundred miles rather than fly to your destination. You will save money on air tickets, airport food, overpriced hotels, rental cars or taxi, currency exchange, and other charges.

11. Cook at home and cut down on eating out.

Eating out often might be expensive when you start living on a fixed retirement budget. One of the ways to save money is to cook more meals at home.

I like to cook, but I can see how it might be boring to eat at home all the time when you are retired. You easily get caught in a routine of the same dishes – pasta and meatballs, fish and rice, or chicken noodle soup.

To save money and still have fun, plan on eating out at lunch rather than at dinner. Many restaurants have a cheaper lunch menu. Instead of eating out once a week, start eating out only once a month.

If you want to dine out in an expensive restaurant, avoid ordering appetizers, alcohol, and dessert to save money on the highest price increase items.

To cut your spending on dining out, take advantage of deals and discounts. If you receive a 10 percent senior discount on a $120 meal, it will reduce your annual cost of dining from $1,440 to $1,296. So, you can keep $144 in your pocket and still have fun eating out on a reduced bill.

Ask about senior discounts before ordering the meal. Special savings like senior discounts are not always advertised or offered by the restaurant employees because of age sensitivity.

To save more money sign up for Groupon to receive coupons or discounts. And check out the AARP website for restaurant discount deals.

Article: AARP Restaurant Dining Discounts.

Groupon website

Also, consider a rewards credit card for your everyday spending – like getting cash back. If you do not have any debt, you could easily use a credit card to earn cashback on your groceries and even travels.

The key to making the most out of credit card options available today is using them for purchases you can afford to pay off and paying your bill in full every month.

Best Cash Back Credit Cards of 2020

12. Stay healthy and fit.

To keep your medical expenses down, stay healthy and fit. The cost of healthcare is rising every year. So, it is important to stay healthy in retirement. Start with developing good habits in your new life. Create an exercise routine and follow it thoroughly.

You do not need to spend extra money on expensive personal trainers or gym membership. Walking, running, or cycling outdoor is more than enough to stay in good physical shape for years. Explore your local walking and jogging trails. Those 30 minutes a day you need to spend walking can be done in a local park or greenway path.

Leave the car at home and walk or bike to the local store, bank, or post office. Gardening or decluttering are easy ways to keep you active and fit.

Follow a healthy diet rich in whole grains, vegetables, fruits, and low-fat dairy products. Additionally, do not forget to shop smart and always read food labels to avoid foods high in cholesterol and saturated fat.

13. Keep track of retirement expenses.

It is important to stick with your budget and keep track of your retirement expenses. You may need to adjust your spending habits and make it fit within your budget.

Always remember how hard it was to save for retirement. Do not fall into the consumption trap and find new ways to spend less on your purchases.

For example, try to limit spending at your favorite stores by setting up a fixed amount or just bring cash. If you do not have enough cash to pay for your purchase, do not allow yourself to pay for it with a credit card.

Another way to control impulse spending is to shop online. Compare prices, read reviews, and do not buy more stuff just because it seems cheaper. Setting up a budget for different occasions like a holiday budget or a vacation budget will help to keep track of your expenses.

14. Pay off debt before you retire.

If you want to live well on less in retirement, consider paying off any high-interest debt such as a credit card before you stop working.

It can be difficult to pay off debt while living on a fixed retirement income. These monthly payments may become one of your largest retirement expenses. Getting rid of debt before retirement will help you to live with less stress and fewer liabilities.

15. Set up systematic withdrawals from retirement funds.

Once you leave the 9-to-5 world, do not give yourself limitless access to your retirement funds. You do not want to go through them fast.

To avoid unlimited spending, you should use the ‘4 percent withdrawal rule’ for systematic withdrawals from your retirement funds. You can call it ‘my retirement paycheck’.

Set it up as a direct deposit coming from your retirement savings – 401(k), IRA, Roth IRA – into your checking account once a month. This process will help to control your spending. Otherwise, you might start treating your retirement funds as a big pot of cash.

Have you saved enough money for retirement? Do you know for how long will your money last? Have you thought about retiring on less money and the ways to do it? Share your thoughts in the comments below.