Retirement Planning Guide – 3 Ways To Reduce How Much Money You Need To Retire

Saving a ton of money for your retirement is generally not an easy task. Even if you have taken the time to put together a retirement planning guide it’s often too little and too late.

For most people retiring to a hefty nest egg is more of an afterthought than it is a well thought out plan. Rather than getting all discouraged and having endless sleepless nights why don’t you simply think about changing your strategy? What are you talking about Willis?

Instead of trying to save a lot of money for retirement and failing why don’t you instead reduce your expenses post retirement? The more you can reduce your expenses the less money you will need to have in a savings and investments account.

It’s estimated that on average a retiree will spend about 3-5% of their savings each year during retirement. Picture this, when you retire you will have a cumulative amount of money in savings and investments. Each year during retirement (average years of retirement for retirees is 20 years) you will drain off 3-5% of your money to live on.

How much will you need to have saved to remain solvent during your golden years? It’s estimated that you will need at least 25 times the amount you plan on spending annually. This is also known as the Rule of 25. Now let me show you a little slight of the hand trick that you can use with this rule.

The rule of 25 tells you how much you need to save for retirement if you are willing to spend less. For example, if you reduce your retirement budget by a measly $100 per month will need $30,000 less in retirement.($100/mo x 12mo = $1,200yr), ($1,200/yr x 25 = $30,000).

Thirty grand is nothing to sneeze at. Slashing your expenses during retirement certainly is far easier than finding a way to sock away an additional $30,000, especially if you started late or you’re without a strategic retirement planning guide.

To help you fast track your way to reducing your monthly expenses during retirement without compromising your happiness we’ve listed below 3 ways you can reduce how much money you need to retire:

1) Downsize – There’s no need for that 3,000 square foot home anymore now that all the kids are gone. Smaller house means lower costs for upkeep, property taxes and insurance. Consider moving into a small condo or town home where you don’t even have to be responsible for the cost of yard maintenance.

2) Live Healthier – Health care costs will continue to rise and will quickly wreak havoc on any retirement budget. Some health care costs will be unavoidable simple because of age but you can certainly do your part by eating more servings of fresh fruits and vegetables and avoiding processed foods. Don’t forget to moderately exercise a minimum of a few times each week.

3) Become A Spendthrift – Little things do add up. Take advantage of mid-week savings at your local grocery store, attend discounted matinees and take advantage of senior discounts at restaurants.

Learning to live more simply is an acquired skill than can serve you well into your retirement years. The real key to retiring successfully is finding ways to live on less is to do so without cramping your lifestyle and happiness.

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