Outliving your pension is a horrible scenario that nobody wants to encounter. Times are tough and the economy isn’t as stable as it once were. Whether you work at Verizon, FedEx, Wells Fargo, or Home Depot, a good retirement plan is essential in making your pension last.
Make Your Money Grow
You may have stopped working, but it doesn’t mean your money has to. Investing allows you to make your money work for you. Yes, everyone still remembers the recession of 2008 and how it tanked a lot of invested money. However, spreading your investments or partnering with a reputable financial institution can make your investments secure. Static money earns very little interest and gets devalued due to inflation. $500 worth of groceries in 1993 cost $887 today. 20 years after your retirement, you might find your money’s worth was cut by almost half. Investing your money allows it to keep growing, keeping up with — or even surpassing — inflation rates. If you have the business acumen and the desire to continue working, you might want to start a business. A business can be a real moneymaker, but there are also bigger risks involved.
Cut Your Spending
One way to make limited money last is to cut spending, and one of the best ways to do that is to stay healthy. Lose a few pounds and exercise a bit. Investing in a gym or an exercise program today can save you hundreds of thousands of dollars’ worth of hospital bills in the future. Move to a smaller house, and if you’re located in a sunny state, get solar panels. Solar panels (2-3 kW systems) will cost you less than $200 a month on a 5-year financing plan and they can cut more than $200 on your monthly electric bill. They’re practically free, lasts for 25-30 years, and they give you an extra $200 to spend after you’ve paid for them in 5 years. You can also start using public transport or just drive a newer (preferably smaller) car.
Run from the Taxman
Retiring in New York or Los Angeles is practically impossible unless you’re really rich. One of the biggest expense hounding retirees is taxes, but there are ways to get around them. No, you don’t need to fly to the Cayman Islands to escape taxes; just move to a tax-friendly state. Alaska, Wyoming, and South Dakota impose some of the lowest taxes in the USA, or you can try Florida, Pennsylvania, and Texas if you want a more urban setting. Florida is particularly popular with retirees as the state has the most senior-centric healthcare institutions while also doing away with income tax, estate tax (up to a certain level), and inheritance tax. With your pension more or less intact, you have additional money that you can save or spend as you wish.
A limited pension won’t be a problem if you have a good retirement plan and stay relatively healthy. Mind your money and don’t hesitate to move if it means you get to eat the whole pie.