How to Boost Your Senior Retirement Savings

Written By: Discovery Senior Living
How to Boost Your Senior Retirement Savings

Retirement is a life phase many people dream about, filled with the promise of relaxation, pursuing hobbies, and spending quality time with loved ones. However, for many seniors, financial concerns can overshadow this dream.

22% of people surveyed regretted that they didn't start saving for retirement early enough, according to BankRate.com.

Whether you've started saving late or feel your nest egg isn't sufficient, it's never too late to boost your senior retirement savings.

In this guide, we'll explore actionable strategies to help seniors improve their financial outlook and build a more secure retirement.

1. Assess Your Current Financial Situation

Before making changes, evaluate your current financial standing. This includes:

  • Reviewing Assets: List all assets, including savings accounts, investments, home equity, and other valuables
  • Calculating Retirement Income: Include Social Security benefits, pensions, rental income, and dividends
  • Analyzing Expenses: Identify necessary expenses (housing, healthcare, food) and discretionary spending

This assessment will help you determine how much more you need to save and which areas require adjustment.

2. Delay Retirement or Work Part-Time

If possible, working a few extra years can significantly increase your retirement savings. Additional income allows you to:

  • Contribute more to retirement accounts.
  • Delay drawing Social Security, increasing your monthly benefits.

For every year you delay Social Security past full retirement age (up to age 70), your benefit increases by about 8%.

Part-Time Work

If full-time work isn't feasible, consider part-time or freelance opportunities. Many seniors find fulfillment in flexible jobs like tutoring, consulting, or online work while earning extra income.

3. Maximize Contributions to Retirement Accounts

Seniors aged 50 and older can contribute extra funds to tax-advantaged retirement accounts like:

  • 401(k): Up to $7,500 more annually (as of 2024)
  • Traditional or Roth IRAs: An additional $1,000 annually

These catch-up contributions allow you to boost savings quickly in the years leading up to retirement.

Take Advantage of Employer Matches

If you're still employed and your employer offers a 401(k) match, contribute at least enough to get the full match. It's essentially free money added to your retirement savings.

4. Downsize to Free Up Funds

If your current home is larger than you need or comes with high costs, downsizing can be a strategic move:

  • Sell Your Home: Use the equity to invest in your retirement
  • Reduce Expenses: Smaller homes often mean lower property taxes, utility bills, and maintenance costs

Alternatively, consider relocating to a more affordable area with a lower cost of living or an affordable but comfortable senior living community.

5. Reassess Your Budget

Even small adjustments to your spending can significantly impact your savings over time. You can start by cutting unnecessary expenses.

  • Cancel unused subscriptions or memberships
  • Opt for more affordable alternatives in dining, travel, and entertainment
  • Shop for discounts and use coupons

Redirect the money saved from reduced expenses toward retirement accounts or investments.

6. Consider Passive Income Opportunities

How to save for retirement when you don't work full-time any longer? Passive income streams can provide ongoing financial support during retirement.

Options include:

  • Rental income: Renting out a room or an entire home can generate steady income
  • Dividend-paying stocks: This provides regular income without selling your investments
  • Peer-to-peer lending or REITs: These offer ways to earn returns with minimal active involvement

7. Leverage Home Equity

For many seniors, their home is their most valuable asset.

Use a HELOC to borrow against your home's value for major expenses or investments.

Reverse Mortgage

A reverse mortgage allows homeowners aged 62 or older to receive payments based on their home's equity, providing a steady source of income.

While helpful, reverse mortgages come with risks and fees, so consult a financial advisor before pursuing this option.

8. Manage Healthcare Costs

Healthcare expenses can significantly impact retirement savings. Mitigate these costs with strategic planning.

Use an HSA

If you're eligible, contribute to a Health Savings Account (HSA). HSAs offer triple tax advantages and help in maximizing retirement funds:

  • Contributions are tax-deductible
  • Funds grow tax-free
  • Withdrawals for qualified medical expenses are tax-free

Shop for Medicare Plans

Compare Medicare plans annually to ensure you're enrolled in the most cost-effective option for your healthcare needs. Do the necessary research and spend the time speaking to the people in question.

9. Seek Professional Senior Financial Advice

A financial advisor can provide personalized guidance to optimize your retirement savings strategy. They can:

  • Help diversify your investments
  • Create a sustainable withdrawal plan for your retirement income
  • Identify tax-saving opportunities

Many advisors specialize in working with seniors and understand the unique challenges of retirement planning for seniors.

10. Invest Wisely

Investing can help grow your retirement savings, even in your later years. Balance risk by diversifying across stocks, bonds, and other asset classes.

As you approach or enter retirement, prioritize low-risk investments like:

  • Bonds
  • Index funds
  • Certificates of deposit (CDs)

11. Plan for Long-Term Care

Long-term care expenses can quickly deplete retirement savings. Preparing in advance is crucial.

Start by purchasing long-term care insurance. This insurance helps cover costs for nursing homes, assisted living, or in-home care.

If you anticipate needing assistance for long-term care, consult an elder law attorney to protect your assets.

12. Stay Healthy

Good health reduces medical expenses and extends your ability to work or enjoy an active retirement. Prioritize the following activities.

13. Avoid Common Pitfalls

Withdrawing from retirement accounts before age 59½ can lead to penalties and taxes. Avoid withdrawing too early.

Steer clear of investments promising unrealistic returns, as they may jeopardize your savings. For example, don't invest in new cryptocurrencies unless you have good knowledge of the subject matter.

Senior Retirement Savings Options Are Many

There's no need to start panicking that you didn't save enough for retirement. With our tips above on boosting senior retirement savings, you will be far ahead of the curve and can relax during your golden years.

Still, looking for accommodation that's affordable and within your budget? At Addington Place of Edwardsville, you will get an elevated senior living experience with quality dining, daily social activities, weekly housekeeping, on-site care services, and more.

Schedule a tour to check out all the amenities on offer with our all-inclusive pricing so you can budget each month without issues.

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