May 24, 2018

Ways Seniors Can Save Money

Seniors Save Money

Millions of America’s senior citizens are looking for ways to save money now that they are living on retirement income.

Millions of America’s senior citizens are looking for ways to save money now that they are living on retirement income. There are things they can do, including:

• Cut the cord on monthly cable costs. You could save up to $100 per month or more by switching to Netflix or Amazon Prime Video subscriptions. But you can avoid even those fees by switching to an antenna that can relay news, weather, sitcoms, cooking shows, kid’s shows, sports and movies for free. Most broadcast stations offer additional regional programming free. The Clear View antenna, for example, is one that attaches to your current TV antenna jack. The new antennas are greatly improved from your old “rabbit ears.” Look at the option that will best serve you.
• If you are traveling, there are many discounts that will cut the costs. Many hotels and motels routinely offer discounts for seniors, usually in the range of 10 to 15 percent. Shop around a little before settling on away-from-home accommodations. Booking.com can help you find the most economical choices.
• If you own your home, investing in a home security system could save you money on insurance. Savings of 10 to 20 percent are offered by some insurance companies to clients who install a high-functioning home alarm system. Some alarm companies also offer perks for the purchase of their systems. An alarm system also has the benefit of putting seniors within easy reach of help in an emergency.
• Cruise lines provide a huge variety of discounts for seniors. Check and compare among the leading cruise providers to see where you can get the best deals. A little time spent researching could make your vacation funds go a lot further.
• A lot of the top retailers give senior discounts. Each store decides on when the discount kicks in, some setting the limit at 50 years old and others at 55 or 60. Some of the retailers have regular days on which seniors are treated to discounts. Don’t be shy about asking.

What Do You Want For Retirement

Retirement

As a rule of thumb, the more you are willing to give up early on, the faster you will reach the goal.

How Much Cash Do You Want In Retirement?

Ever tried to calculate how much money you would like to have to live on in the way you want to in retirement? Fifty thousand a year? $150,000? Maybe $500,000?

If you want to try to figure it out, subtract out income you currently have from your job and any other income sources. Divide the figure by .04 to see what assets it would take to support that level of annual income. Many financial planners use the .04 figure based on experience that says you could withdraw 4 percent of your money each year and put it into an account that would generate enough, over time, to maintain its value after calculating for inflation.

For example, if you think you would need to make $80,000 per year to live as you like. In fact, you only work part-time and make $20,000 per year. You assume that you can expect about $15,000 per year in Social Security. Take the $80,000 and subtract $35,000 and you’ll have $45,000. Divide that by the .04 and you’ll have a figure of $1,125,000. That’s the amount you would need to earn the other $65,000 from your investments if you want never to run out of money.

The next factor you need to decide on is when you will be wanting the money. If you are 30 and want to retire at 65, you have 35 years to get the money lined up. Use an online calculator such as calculators online, to figure it out how much in monthly savings you will need to reach the goal. Such a calculator also can guide you in different scenarios, showing how long it will take to reach your goals under different savings and investing plans.

Assuming an 8 percent return on your investments, you’d have to set aside $754.85 per month until retirement. (If you had started at age 25, the amount would be only $322.26 per month. If you had begun at 18, the monthly cost would have been $181.09. That’s the power of compounding.)

If you aren’t expecting to leave anything to family or friends, a charitable remainder trust could be a great choice. The savings figure would be much lower because this model assumes that you would maintain the $1,125,000 fund in perpetuity.

Many financial planners will estimate your lifespan and create a program that will see your money run out at your 85th birthday, or longer.

You can expedite your goal by saving more each month. Say $300 per month extra could help you arrive at the goal much, much earlier, possibly decades. That may take some sacrifice – a used vehicle instead of new, fewer meals out, less expensive clothing, etc. Your priorities are your own and no one can make this decision except you. But as a rule of thumb, the more you are willing to give up early on, the fast your will reach the goal. Avoiding unnecessary debt is one of the objectives you should set early and stick with.

Try to look ahead as much as you can. If your part of the country appears to be headed for depressed conditions, move to a place where the economic picture is more rosy. If that seems drastic, consider: If you are not willing to be inconvenienced for the chance of a better life, then you must be content to live in poverty.

Making a good beginning toward your retirement goals is wise. Passing up car ownership into your 20s may save you the costs of upkeep, fuel and insurance. Instant gratification can be costly.

Wealth Gap Lasts Into Retirement

It just seems to make sense that if you keep plugging along at a your job, by the time you retire you should have come closer to the level of wealth some others enjoy.

Not so, experts in the field say. Thousands of Americans struggle to set aside enough money to enjoy retirement, particularly those who are self-employed. They are having little success at building an adequate post-employment reserve.

The challenge is so overwhelming that many refuse even to look it square in the eye, which becomes a serious part of the problem. Pensions that used to provide the safety net for many workers are becoming rarer in the private sector and workers at the low end of the totem pole often have no access to such programs.

Are Dream Vacations A  Reality For You?

Are Dream Vacations A Reality For You?


All of this contributes to the widening gap between the average worker and the wealthy. With more than 70 million Baby Boomers preparing to leave active employment and settle into retirement, that is not good news. The net result may be government services stretched more thinly and more elderly people staying in the working ranks for longer, increasing the challenges for younger workers looking for jobs.

Who Fares The Best In Retirement?

Predictably, next to the really wealthy, those who fare best in the retirement picture are highly educated couples. They are likely to have more resources such as 401k plans, savings and home equity that are a boon when their jobs end. Those with less education, health issues and/or lower income and fewer resources can only watch in frustration as their prospects for a financially secure retirement fade into the distance.

The old saying that the rich get richer while the poor get poorer is literally true in today’s economy. Incomes for the top 1 percent of earners rose 31 percent from 2009 to 2012, according to an economist at the University of California/Berkeley. For the remaining 99 percent, the rise averaged 0.4 percent.

In households with annual income under $25,000, nine of 10 had savings under $10,000, according to the Employment Benefit Research Institute. For households in which earnings topped six figures, 42 percent had savings of at least $250,000, the institute reported. Five years ago, that percentage was 34 percent, another indication that the retirement prospects for those in the low-earnings categories are making no headway toward any kind of parity.

Make A Million At Age 70

The 70s Could Be Your Golden Years In More Ways Than One

So you’ve retired. The end of the earning road, right? No way, say financial experts who have studied the issue. More than one fortune was built by people who had passed the 70-year milestone. Later-life entrepreneurship actually has some benefits that might not have worked earlier, they say.

A Bankrate.com article by Chris Kissell suggests that, with a little effort and sacrifice, there is money to be made by people who have some experience behind them. No need to give up that dream of spending the time you have left in comfort.

The suggestions advanced by the experts include:

Make A Million

Make A Million

Invest Aggressively

Making small investments while you are in your prime working years may give you a nice little nest egg. But if that opportunity passed you by, it isn’t too late. Invest as much as you possibly can every month and hope for good results. According to James Twining of Financial Plan in Bellingham, Wash., a 70-year-old retiree who could invest $2,393 per month, at an annually compounded rate of 10 percent a year could end up with a million dollars by age 85. The equity markets have been returning an average of 10 percent per year since 1926, he notes. He warns against the temptation to gamble on high-stakes stocks, a strategy that actually can defeat your success ratio.

Start a Business

Creating your own business is one of the historically successful ways to increase your worth. Older first-timers actually have some advantages over younger entrepreneurs, says William Carrington, founder of Arrington Financial Planning in Arlington, Va. He is convinced it is the best route to financial security. Those in the retiree camp have a lifetime of experience on which to draw and have generally developed expertise in at least one line of endeavor. His advice is to explore that expertise and see how it could translate into a viable company. In the process, it may be possible to spread the wealth by hiring other older (often that translates to more reliable) retirees, many of whom are willing to work for less than young folk.

Delay Social Security

The longer you wait to collect Social Security, the larger the monthly payment. It is one of the most stable sources of income for the elderly. According to Barry Korb, president of Lighthouse Financial Planning in Potomac, Md., a couple who hold off on collecting their SS until age 70 could end up with a comfortable amount — up to a million dollars— that would be a great investment fund if carefully handled. He posits that a couple, both age 66 and entitled to maximum SS payments, could realize a 32 percent increase in their payments, about $845 per month each or $1,690 for the two. Invested, say, in a Standard & Poor’s 500 index fund, which averages a 7.84 percent return after taxes over the years, they would be millionaires by the time they were 92. That doesn’t take into account SS increases, which would add to the total.

Buy Real Estate

This avenue to wealth requires significant risk, but is a proved method for getting rich quickly. The best return — and the greatest risk — comes from using leverage. For instance, if you purchased a $500,000 property with a 20 percent down payment, and if there is a 5 percent appreciation in the first year, the increase for you is $25,000. That’s good, but again, the experts point to the risk and advise caution.

Forget About Making a Million

Aside from the bragging rights in having accomplished what for many is a lifelong goal, what’s the point? Given the inevitability of decline and death, is it worth the effort? For some, it would be, especially if their objective is focused on the well-being of dependents. However, people like Twining who deal with financial issues for a living, think a drive to accumulate huge amounts of money in the twilight years is wasted effort. “Get-rich schemes very rarely work,” he says. “Somebody who is 70 or older would be foolish to give it a try.”

In other words, it’s possible, but . . .