A sad fact is that 1 in 5 seniors are living in poverty, but there are beneficial tips for avoiding poverty as a senior. Retirement should be a positive time of relaxation and enjoyment, but have little money can make it a time of worry. Unfortunately, this is a reality for many seniors.
Political problems are creating instability in social security and other benefit programs, so they aren’t doing their job of alleviating senior poverty. This doesn’t bring much light to the future of seniors having something to depend on. There are certain steps you can take right now to avoid being broke in your senior years.
A positive move is to open a tax-advantaged retirement account. Many Americans don’t have access to a workplace retirement plan. A plan provided by your work makes saving for retirement easier, but it’s not crucial for getting tax breaks.
An option for getting tax breaks is opening an individual retirement arrangement with a broker. Contributing to an IRA can allow for tax deductions. Being able to deduct contributions means the money you set aside for your future won’t reduce your take-home income as much.
Calculate Money Needed in Retirement
Figuring out how much income will be needed in retirement will help to relieve worries in the future. It’s a common theme for people to end up with too little money in retirement because they didn’t calculate their costs. Underestimating the amount of savings needed during retirement or overestimating the amount social security will provide can put you in an uncomfortable situation.
Instead of going into retirement unprepared, take the time to sit down and figure out the costs. There are guides online that can help in estimating the amount of money you will need for retirement.
Start Saving When You’re Young
If you wait too long to start saving it becomes more difficult to reach your target saving number. Starting early can put less pressure on you when you’re older to put more of your paycheck towards retirement every month. Saving money now can seem difficult, but living in poverty as a senior is a lot worse. Do whatever it takes to start saving money today for your future.
Create a budget for yourself to find ways to cut expenses and out savings first. If it’s not possible to save from your main income try picking up side jobs to earn extra money to put towards your savings. Put the money from your side job entirely into retirement savings so your work pays off in ensuring you don’t end up in poverty in the future.
Avoid Retirement Myths
People believe that to manage well in retirement that you need to save 10% of your income. Unfortunately, this is a myth because lifespans are longer and health costs are increasing. It’s a safer bet to be saving 15% to 20% of your income for retirement.
Social security makes people think that they will have a cushion, but it’s meant to replace only 40% of your income. If you think Social Security is going to be enough and that you don’t need to save a lot, reevaluate today.
Many believe that if they don’t have enough saved by 60 that they can just work longer. Although, health issues and difficulty finding a job as a senior can force people into retirement earlier than planned. Early retirement can increase the risk of financial struggles, creating less time to save and relying on savings sooner than expected.
The Victorian Assisted Living and Retirement Community
The Victorian is an assisted living and retirement community that makes living independently, while at the same time feeling safe and secure, a reality. We strive to provide the best quality of life for all residents including those suffering from loneliness and depression.
We offer a comprehensive activity program that includes both physical and social activities to encourage emotional well-being. Our staff is trained to assist those with depression. If you or a loved one are considering assisted living, contact The Victorian today to learn more about our services or tour our community.