In theory, it’s very simple: If your retirement income exceeds your expenses, you’re in good shape. In practice, it’s, shall we say, more complicated, with many different approaches.
Make More Increasing your income is one broad approach. You can invest some of your savings, but with the ups and downs of the market, making a profit isn’t a sure thing. You could look into annuities, which pay more than the 1% or so that money market funds offer, but that means tying up your principal for years. If you wait until age 70 to claim Social Security, you’ll get higher monthly benefits. But if you’re in your late 60s and already getting monthly payments, you’ll need a time machine to change that.
You could also see about earning some income with a part-time or full-time job.
Spend Less The expense side of the equation is the one you have more control over. But before you can control expenses, you need to know what they are. So before doing anything else, you need to dig out those receipts and those checking and credit card statements and do a cash-flow analysis to determine just what how much you spend each month, and on what. If those expenses total more than your monthly income, there are two main approaches to cutting them.
The Nickel and Dime Approach This approach involves cutting out small luxuries whose cost can add up over time. For example, a daily latte at Starbucks is $5; over a year that’s $1820. Depending on your TV package, cutting the cable can save around $90 a month, or $1080 annually. A home energy audit could save you $100 or more a month; that’s $1200 annually. And if you have both a mobile phone and a landline, do you really need to pay for the landline?
Finally, if you pay for health club membership every month, you could get free health club membership by changing your Medicare plan (see below).
The Big Bucks Approach While the nickel and dime approach starts at the bottom, this approach starts at the top: With housing, cars, health care, insurance, and taxes.
Public transportation being what it is in Richmond, having a car is a necessity. But do you still need two of them? Selling one and sharing the other can eliminate one set of car payments, liability and collision insurance premiums, and maintenance and repair bills.
Do you have whole life insurance? What kind of dividends is it paying? Would you be better off turning it in for the cash surrender value?
Is your empty nest too big? Downsizing can lower your mortgage payments, taxes, heating and utility bills. It can also help you avoid major furnace or air conditioner replacement costs.
And it can cut your property taxes in two ways. First, a downsized house will have less property value to be taxed. And second, property tax rates vary considerably, depending on location – from $1.20 per hundred dollars of assessed value in the City of Richmond and 96¢ in Chesterfield County, all the way down to 87¢ in Henrico, 81¢ in Hanover, and 53¢ in Goochland.
If you’re enrolled in Medicare Part B, you could save substantially by enrolling in a Medicare Advantage plan. Like standard Part B, there’s no added premium. But unlike Part B, you’re covered for prescription drugs, routine dental and eye exams. You also get free health club memberships, free drugstore supplies, and other benefits. That’s something to think about during the fourth-quarter open enrollment period.
Another way to save on health care is to avoid paying for health care you don’t need, or for a higher level of care than you need. That’s what our thorough three-part needs assessment is particularly good for. Instead of presenting ready-made, off-the--shelf “solutions,” we ask you and your family questions. About everything from physical, psychosocial and mental status to mobility issues and nutritional needs to legal wishes.
What we learn becomes the basis of a holistic, coordinated care plan, designed around your specific needs. That way, you don’t miss out on care you need or pay, unnecessarily, for care you don’t.
Please contact us for a consultation, and learn more about what holistic senior care management can do for your physical, emotional, and financial health.
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