How To Live the Good Life With Retirement Savings (3 Secrets)

How To Live The Good Life With Retirement Savings (3 Secrets)
Photo by Sven Mieke

From Peter Reagan for Birch Gold Group

Thanks to the last 4 years of a persistent rate of higher-than-normal inflation, the magic number to retire is north of $1.8 million today.

Less than half of older Americans believe they can achieve that magic number.

Thanks to evaporating buying power and higher retirement expenses, mostly due to raging inflation, it’s even harder to plan for your retirement.

“Don’t worry!” says the Biden administration (probably), “We’re going to increase your retirement contribution amount by $500 to $23,000 in 2024!” Gee, thanks…

So with that in mind, the question we’re going to explore briefly is this: “How could you plan your retirement savings so it lasts as long as possible?”

Here are three ideas for you to consider that could help you extend your savings…

#1 – Plan to live frugally (especially in retirement)

While you’re working, it’s a little bit easier to earn extra income when you need it. You can take up another job, work a side hustle from home, or invest.

But once you get older, and retire, those options dwindle. That means you should consider living frugally. A recent article in Entrepreneur summarized what that might mean for older Americans:

Everyone has their own definition of frugality. Some people learn to economize to put money away for retirement, while others learn to live frugally to indulge in more extravagant habits. For example, you may be passionate about cooking and purchase only the highest quality ingredients. Still, you may feel that keeping up with the latest fashion trends is unimportant and, therefore, rarely do so.

A few more easy ways to live frugally that you could consider: automate bill payments, find ways to save water or flip the lights off, plan your meals to reduce impulsive eating, or even downsize your home.

Of course there are many other ways to live frugally (like selling some of that old stuff in the garage), but you get the idea.

Even if you decide to live frugally in every way possible, there’s more to putting yourself in a position to enjoy a long-lasting retirement…

#2 – Make sure you actually have a long-term retirement plan

In addition to making sure you’re healthy enough to outlast your retirement savings, there are other factors to consider in order to develop a long-term retirement.

You should consider making sure your plan is prepared for the long-term. While that may sound simple, there are a few moving parts to think about, as summarized on Investopedia:

For example: what are your family plans?

It is also worth thinking about your plans for retirement, including any changes to your home or residence.

Finally, one should also consider the different types of tax-advantaged retirement accounts. Most Americans qualify for social security, but those benefits are rarely enough to support all of their expenses in retirement.

The piece continues with five key retirement planning categories, which add a bit to think about when taken as a whole:

  1. Time Horizon (how long do you plan to use your savings?)
  2. Retirement Spending Needs (varies according to the individual)
  3. After-Tax Returns (how much do you have to spend after taxes?)
  4. Risk Tolerance (how well can your retirement handle risk?)
  5. Estate Planning (when you’re gone, how is your estate managed?)

Finally, it’s also important that your retirement savings are ready to weather any incoming storms that might drain it.

#3 – Prepare for risks to your savings

No matter how well you plan your retirement savings, or aim to live frugally, there will still be some level of risk left in your portfolio.

An article on Kiplinger’s brought three risks into clearer focus:

Over the course of a long retirement, you are likely to experience changes in tax rates, inflation and a weak economy. All of these risks can deplete your retirement savings sooner than anticipated. So, you’ll want to include strategies in your plan that can protect against these risks.

In addition to simply maximizing your potential Social Security benefit, the piece went on to suggest a couple more helpful ideas, which could mitigate the risks above:

Investing through a Roth 401(k) or Roth IRA can help mitigate future tax risks by paying Uncle Sam now.

Saving enough for retirement: Lack of retirement security presents a risk to the individuals who may face financial hardship and to society as a whole.

After considering everything above, the good news is, you can also consider another option that could remove even more risk from your portfolio.

Bonus: How to ensure long-lasting savings

In addition to considering the ideas presented above, you can also consider proper diversification as a strategy to ensure your retirement savings outlast you. So if you’re looking for one alternative asset that can help you diversify your retirement portfolio properly, then consider the following…

Physical precious metals like gold and silver have little to no counterparty risk, and have historically provided an inflation-resistant store of value. That means they could bolster your savings, while also helping them last longer.

But no matter what you choose to do, make your decision soon, before everyone else catches on and bids up prices even further.

You can get the rest of the story about the advantages of diversifying with precious metals like gold and silver on our education page.

2024, Featured, retirement plan, retirement savings