Reducing expenses is everyone’s least favorite part of financial planning, but when overspending becomes a problem, it’s important to have a plan at hand that can help you quickly reduce expenses and eliminate further stress. An important consideration for all retirees who find themselves overspending is the following question: Are there any lifestyle changes that would help to save or free up money for other essential, unavoidable expenses?
Try targeting two of your biggest expenses first: Housing and Health Care
Cutting housing costs: Retirees 75 and older spend 43% of their savings on housing expenses, including property taxes, homeowner’s insurance, and other home-related expenditures, according to the Employee Benefit Research Institute.
Many retirees find that downsizing their living space can significantly reduce housing expenses. Another option is to move to an area with a lower cost of living.
Cut Medical Costs
USA Today reports that retirees spend an average of 11.4% of their income on health care. Medicare generally covers 80% of medical bills, leaving plenty of risk for crippling medical expenses. Also, Medicare provides no coverage for certain medical costs, such as dental care, eye exams, glasses and orthotics. To help control these costs, look into coverage through supplement plans. Medicare supplement plans help retirees’ bottom line, as does opting for generic drugs and supplements when possible. A financial adviser specializing in retirement planning can provide many additional ways to preserve wealth through insurance and investment strategies.
Aside from housing and medical costs, food and transportation expenses can also unknowingly contribute to overspending. Simple lifestyle choices, such as eating at home one or two additional times per week, can save money on food and transportation, keeping many retirees’ finances on track. Finally, always opt for senior discounts when available and frequenting establishments that offer senior specials.
Choose a Trusted Financial Adviser
Monthly or annual reviews with an expert financial adviser provide the definite cure for overspending. Advisers review investment decisions and make the necessary changes to address the issue directly. They also calculate the optimal withdrawal rates and adjust as needed. They can create spending schedules, identify methods for diversifying income sources, and plan withdrawals for optimal tax scenarios. For retirees with an overspending problem, meeting a financial adviser can ensure their financial security. Retirees who gain assistance with overspending from financial advisers are usually surprised to find how quickly the problem can be corrected with the proper help. Ultimately, the collective goal of retirees and financial advisers is to maximize the retiree’s money and time to help them enjoy their golden years.
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Bob Michaels is extremely passionate about providing the best possible legal experience for his clients, and focuses his practice on elder law, estate planning, business, and real estate matters. Bob specializes in helping folks build a long-term care plan based on their circumstance. If you are considering a long-term care plan, schedule your appointment today!