Americans have grown so accustomed to the grind of working for bi-weekly paychecks that the definition of retirement is no longer what it used to be. A landmark Merrill Lynch study released in June found that 72 percent of Americans age 50 and up said their ideal retirement will include working in some capacity. Granted, the respondents indicated their post-retirement jobs would be “more fulfilling and flexible” than their current jobs. But if these individuals had the means, skill set and financial wherewithal to choose their profession, they’d already be doing it.
Median monthly income for Americans in 2012 (the most recent Census data available) was $51,371. The average annual Social Security benefit is $15,300 in 2014. Americans planning to work during retirement to maintain their current standard of living would have to make $35,000 annually on top of Social Security. But financial freedom in retirement will only come from major adjustments that could start to save you small amounts that will gradually grow, and planning before retirement. Incorporating these four basic lifestyle tips will help you get closer to that financial freedom in retirement:
Get Rid of Television
The average American over the age of 15 spends about 20 hours per week watching television, according to the Bureau of Labor Statistics. Further, market research firm NPD Group estimates the average cable/satellite bill costs Americans about $1,400 annually.
Despite television sets getting more energy efficient, they can still guzzle 160-plus watts of power to use. Assuming an electric rate of $0.12 per kilowatt hour (the national average), television watching adds about $50 per year to your electric bill. You are also endlessly exposed to powerful advertisements designed to invoke spontaneous spending on material items you don’t need.
Getting rid of the television could literally save you thousands of dollar per year, not to mention free up time for more physical or new brain enhancing activities.
Lower the Thermostat
A data analysis by cloud computing provider Energy Hub found for every one degree you turn the heat down in the winter time, you save 3 percent on utility costs. The study specifically points out that Michigan residents could save about $30 per month by lowering their thermostats three degrees below their normal setting.
It’s not as if 66 degrees is inadequate to keep you warm when the outside temperature is below zero. Buy a few extra pairs of long johns and take the family on a house sweater shopping trip at the local restore or Goodwill. You’ll have fun and save money at the same time.
Re-evaluate Car Insurance
Data by the National Association of Insurance Commissioners revealed 76 percent of drivers in America purchase additional comprehensive coverage above and beyond state-mandated minimums. The difference between liability and comprehensive coverage is about $300 per year on average.
Those who are financing vehicles typically are required by the lender to carry full coverage. But there’s no reason to purchase extra coverage when it’s unnecessary, particularly for an older vehicle. Plus if you do get in an accident, there’s a chance the other person’s policy will pay for damages to your car if they’re at fault.
You can avoid insurance altogether by depositing the state’s minimum liability amount with the treasurer. There are other unique options. Consider liquidating future structured settlement payments to come up with the lump sum of cash for this. When you decide to stop driving and you never get in an accident, you can get the money back. Since this tip is more investment oriented, be sure to do your due diligence research before making any decision.
Utilize a Spending Plan
Now that you’re saving all this money, it’s important to operate with a household spending plan to ensure those dollars remained saved and ideally invested. You also want to be sure to have a system that anticipates all those normal monthly expenses, the unexpected monthly expenses, as well as those periodic pesky surprise expenses that tend to throw off the budget. It’s those surprises and emergencies that often cause a raid on the investments or an increase in the credit card balance. The Budget Kit workbook and the companion Excel Worksheets can definitely help you accomplish all those steps.
Since, the U.S. dollar has lost nearly 21 percent of its buying power since 2004, according to the U.S. inflation calculator, it’s more important than ever to continue to save more, monitor all those expenses and have a plan for the future.
Retirement should be a time to reflect and enjoy life. That goal is in reach for anyone willing to make the effort.
Invest in Precious Metals
Now that you’re saving all this money, you need a means to store and earn a return on it. The answer is simple: precious metals.
The U.S. dollar has lost nearly 21 percent of its buying power since 2004, according to the U.S. inflation calculator. Conversely, both gold and silver have increased in value by at least 200 percent in that same time period. The “golden” rule when it comes to purchasing precious metals is to buy bullion instead of ETFs (stocks). That way you have total control of your assets with minimal Wall Street meddling.
Retirement should be a time to reflect and enjoy life. And financial freedom in retirement is in reach for anyone willing to make the effort.