What if my expenses exceed my retirement income?

Do you find that you don’t have enough to cover all of your expenses with your retirement income? First, don’t despair. This is a common problem for many Americans, so you are hardly alone. There are several things to look at first:

  • Have you considered all sources of income?
    • Social Security (including spouse’s Social Security)
    • Any pension plans for which you or your spouse may qualify
    • Personal savings
    • Other retirement accounts (IRAs, 401(k) plans, etc.)
  • Have you considered other ways to generate income during retirement?
    • Turn a hobby into a money-making opportunity
    • Continue to work on a full- or part-time basis or serve as a consultant
    • Retire to an area with a lower cost of living
    • Reduce expenses by moving to a less expensive house
    • Dispose of unused assets

You may also need to consider delaying vocational retirement. There are several benefits to continuing your career:

  • Social Security. Delaying Social Security until age 70 may be appropriate and can provide you with a higher starting benefit, as well as a higher annual increase. It is also important to consider that while some Social Security benefits can begin as early as age 62, full retirement age for the oldest Baby Boomers is actually age 66, and for younger Baby Boomers (and anyone born after 1960), full retirement age is 67.
  • Savings. Continued employment allows you more time to contribute to your retirement plan and for your investments to potentially grow. It also reduces the number of years you need to stretch your retirement investments.
  • Health care. Many employers may continue health care benefits for you as you work. This is especially important if you are retiring before becoming Medicare-eligible.

Retirement can still very much be a part of your plans; it just may require fine-tuning your goals to make it a comfortable reality.

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