The Financial Prescription for Longer Lifespans: The Financial Prescription for Longer Lifespans: Work Longer and Save MoreWork Longer and Save More

Saving for retirement can be daunting under the best of circumstances. A 2016 study suggested that young workers need to save 22% of their pay or more in order to retire well half a decade from now. But what if you can see retirement age just over the horizon and you haven’t been able to save enough? Your retirement choices, according to financial advisors, are to find a way to save more money, keep working past retirement age, or both work and save.

No retirement savings, or not enough

In March of last year, the nonprofit Economic Policy Institute found that nearly half of the US families in the 32-61 age group had no retirement savings at all, and most of the rest didn’t have enough to retire at 65. Facts like that are why financial experts now advise older workers to be realistic about their retirement plans and to find ways to cut expenses or earn more money to save for later.

There’s another issue to consider when you’re timing your retirement. A recent New York Times article on retirement savings points out that life expectancies were lower when Social Security was enacted nearly a century ago. Today, financial planners often tell their clients to plan as if they’ll live to be 90 or even 100 years old, which means they’ll need more savings.

It’s not so surprising, then, that the number of 55-and-older workers is projected to grow by about 20% by 2024. Most Americans can’t afford a full retirement from working life starting at the traditional age of 65. So what can you do now to build up your nest egg or start one?

Work longer

If you can work beyond age 65, you’ll have a longer time to build your savings. Working past full retirement age and delaying Social Security benefits until you’re past retirement age (which depends on the year you were born) can allow you to earn your full salary and collect your maximum Social Security benefit. Use it to boost your savings rather than upgrading your lifestyle.

Downsize your lifestyle now

We often think of downsizing as something to do when we’re ready to retire or to move to a senior community, but you might be able to save a surprising amount of money now by moving to a smaller home in the years before you retire. Besides a reduction in house payment, you could lower your insurance, property tax, utility and maintenance costs and put that money aside for your later years. Talk to a senior real estate specialist if you decide to downsize.

Are there other expenses you can cut? Now’s a good time to think about whether you need that second car. Maybe ride shares or public transportation would be more cost-effective. And if there are club memberships and subscriptions you pay for but don’t use, start closing those out and putting the money into savings each month.

Monetize your “empty nest”

It doesn’t always make sense to downsize. If your current home is close to work, trading down might raise your commute time and costs (and longer commutes are bad for your health). If you live in a real estate market with high demand, even moving to a tiny house can be a costly proposition. In these cases, you might want to look at your options for renting out rooms in your home, for example, to vacationers or to students at a nearby university. Check with a rental agent and your insurance agent if you want to do this to make sure you follow local rules and have the right coverage.

Before you make any big decisions, talk to a senior financial planner about the savings you have, what you need to retire, and how you can make it work. If you haven’t already begun your retirement planning, the best time to start is now.

Casey Kelly-Barton is an Austin-based freelance writer whose childhood was made awesome by her grandmothers, great-grandmother, great-aunts and -uncles, and their friends.

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