If you think you have enough saved for retirement, you may want to check again. What might have seemed like enough just a few short years ago probably isn’t in the face of new realities: climbing inflation, potential recession, market instability, and declining social security and Medicare benefits that haven’t kept up with increases in the cost of living.
While there is good news in that low unemployment rates mean that older Americans can continue to work if they want to – or even go back to work if they’ve already retired — this benefit won’t last forever. A recent article by Forbes’ Christian Weller has reiterated that while some retirees have received a temporary reprieve, they should be doing more planning now.
“More jobs and higher retirement balances are certainly welcome, but retirees can unexpectedly face a sharp downturn in their economic security in the next recession,” wrote Weller. “In fact, it is likely that the outlook for retirement security will become worse much faster in the next recession than in previous ones.”
So what should older Americans do to plan for a potential recession? There are several steps they can take to protect their retirements in a time of economic uncertainty.
Cut spending.
With streaming services and subscriptions proliferating, it’s easy and not uncommon to see several hundred dollars going out the door in dribs and drabs. With this one hitting your credit card or your spouse’s, and that one hitting your checking account, it may not be quickly apparent how much you’re spending. Sit down and make a list of all monthly subscriptions and calculate a “big picture” number. From here, you can whittle down to only what’s necessary.
Consider having only one car.
While we Americans are conditioned to believe that everyone needs a car, it’s not true for many families. High gas prices and vehicle costs and escalating insurance rates are costing many families or couples an arm and a leg, and with a little pre-planning, they may find that they can do very well with a single vehicle.
Build a retirement budget.
How much do you really need in retirement? Do you know? Many people underestimate their retirement expenses, particularly in the realm of healthcare. Take the time to build a realistic budget for your retirement by investigating likely costs. Build in some “what if” scenarios if you or your spouse became sick. There are software solutions that can help you make a realistic retirement budget and help you with factors such as your desired income, your current savings, inflation, Social Security, and the sequence of returns. Alternatively, consult with a professional financial services firm to help you understand what you’ll need and how you can go about reaching this savings goal.
Consult with a professional.
A financial advisor can help you understand what your options are when building a strategy for recession-proof retirement savings. Arizona-based Prime Wealth Advisors is a full-service tax, retirement planning, estate, and wealth management firm that can take the guesswork out of retirement planning. Call 623.77.PRIME or visit our website for more information.