If you think you haven’t saved enough for a truly secure retirement, think again. The impossible could become possible with these 7 creative ways to retire.
1. Take a Mini Retirement or Gap Year
If you are emotionally or psychologically ready for retirement, but your finances are not quite there, you might consider exploring taking a mini retirement – an extended (3-12 month) vacation from work.
Many people nearing retirement age find that an extended break from work is enough to recharge and re energize. The trick is convincing your employer to let you have this precious time off. According Society for Human Resource Management, unpaid sabbatical leave is offered officially by only 12 percent of employers and only 4 percent of employers offered paid leave programs. However, it may be worth exploring your individual situation with a human resources manager.
Quitting your job with the hopes of finding a similar job upon your return is another option. However, many people who take a retirement gap year actually discover an encore career and new passions during their mini retirements.
If this idea interests you, explore taking a sabbatical, mini retirements and gap years in more detail…
2. Prioritize What’s Important and Dramatically Scale Down Expenses
Living frugally is never going to be easy street, but it can be extremely rewarding to stay focused only on the things that are truly important to you.
Most financial advisors make the assumption that we need to maintain our lifelong spending habits when we retire. While this IS true for most of us, many people redefine themselves in retirement and can dramatically reduce spending – one of the best ways to retire securely.
Retirement is an excellent time to take stock of what you have and what you want. If you know what is most important to you, you can set goals and figure out a way to achieve your highest priority.
A few tips:
Look Carefully at Your Current Spending: When you have established what is important to you, assess your current budget. Take a really detailed look at everything you spend money on – many people are surprised to learn how much little things that don’t really matter to you in the long run can add up over the course of a month.
Cut Costs: Figure out how to slash both the big (eliminating your car can create sizeable savings) and small costs. Get rid of anything and everything not related to your top priorities.
Assess Lifestyle: Take a look at where you live, who you spend time with and what you do on a daily basis. If these aren’t in line with what is important to you, then make changes that can save you money and help you live a more meaningful life.
Remind Yourself About What is Important: Write down your retirement priorities and refer to them daily. It may even be helpful to write a list every day about what you want to accomplish and why. These simple tasks can help you stay on track.
3. Think Outside the Box (Rethink Housing)
Many people don’t think much about their home when creating a retirement plan. However, your home is probably your single greatest expense. According to the Employee Benefit Research Institute, the cost of home and home-related expenses accounts for about 43% of spending for those who are 65 to 74. Reducing this cost could be one of the best ways to retire securely.
Furthermore, if you own your home, then it is also probably your most valuable asset and one that could be used to help fund retirement expenses.
Rent Out Your Home or a Room in Your Home: Housesharing is becoming more and more common. And, Airbnb has absolutely exploded in popularity. Renting out a room in your existing home (or your whole home when traveling) – either on a permanent or short term basis – can be a great way to help fund retirement because it uses an existing resource to generate money.
Downsize: If reducing housing costs and releasing your home equity interests you, downsizing may be a great option for you. When you downsize you sell your existing home and buy or rent something less expensive. It can be a smaller home or a residence in another community. Learn more in this complete guide to downsizing.
Go Teeny Tiny: There is downsizing and then there are tiny homes. If you think that you could live in 500 square feet or less, then a tiny house could simplify your lifestyle and finances. And, did you know that about 40 percent of tiny houses are inhabited by older adults? Is a tiny house the big solution for your retirement plan?
Get a Reverse Mortgage: A reverse mortgage is a loan against your home equity. However, unlike traditional mortgages, you do not have to pay back the money borrowed as long as you are living in the home. If you want to stay in your existing home, a reverse mortgage is an interesting way to eliminate ongoing monthly mortgage payments and get access to cash to use for retirement expenses. More about reverse mortgages.
Hit the Road: A few retirees sell most of their possessions – including the home – and hit the road. Could you imagine living in a motorhome or houseboat and traveling during retirement?
4. Find Work that Feels Like Play
You don’t want to work – working is not “retirement.” However, maybe you enjoy cooking, woodshop or spending time with dogs. There are more and more ways to make money from these types of hobbies.
If there is something you enjoy doing, you can probably figure out a way to get paid for it.
Etsy – Sell handmade goods.
Vayable – Be a tour guide for visitors to your area.
5. Retire Abroad
The United States, especially certain parts, are extremely expensive places to live. Retiring abroad can offer adventure and a dramatic reduction in cost structure for your retirement.
There are affordable places to live in all corners of the world – places where the climate might be a little warmer, where the cost of housing might be a little (or a lot) less expensive, and the healthcare might be more affordable.
But is it realistic to think you can afford to spend your retirement years living in some exotic locale? Not only is retiring abroad plausible, the number of retirees who have actually done this has more than doubled since 2006. And the kicker? They’re doing it for a lot less money than you might think, some as low as $40 per day!
- 10 Unexpected Retirement Abroad Locations
- A 5 Step Plan to Retirement Overseas
- Expert Interview with Retirement Abroad Expert, Kathleen Peddicord
6. Don’t Set a Date – Transition into Retirement
Once upon a time, long long ago… we set a date and planned a big party for retirement. You went to work one day and then never again.
7. Have a Detailed Retirement Plan and Make Smart Retirement Decisions
Creating a retirement plan might not seem like one of the most “creative” ways to retire.
However, only 30% of Americans have a long-term financial plan that includes savings and investment goals and a detailed outline for their retirement finances. So, if you have a plan, you are at least unique – if not creative.
And, the good news for planners? The retirees who went through a rigorous planning process to figure out “how to retire” expressed the most satisfaction with retirement.
The NewRetirement Retirement Calculator makes it easy to create a detailed plan and discover ways to retire securely. Beyond these “creative” ideas – explore how delaying the start of Social Security or optimizing investments can give you a better future.
Start by entering some basic information and get some initial feedback on where you stand. Then you can add a lot more detail and really get an accurate estimate for how much you need. Best of all, you can try an infinite number of scenarios. See how downsizing, a retirement job or reducing expenses will impact your finances.
Retirement Planning Made Easy: Use the NewRetirement planner to find your path to the future you want!
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