Retirement is meant to be a phase where a person removes most of their burdens to enjoy life fully. Unfortunately, many retirees experience financial stress. If you want to avoid or minimize this, this article is for you.
It’s never too late to construct an innovative and stress-reducing financial strategy. There are many tactics you can employ to strengthen your financial position significantly, including:
- Budgeting wisely
- Strategic asset management
- Debt restructuring
- Applying for financial assistance for assisted living
Keep reading this article and learn how to combine these techniques to create a robust financial engine.
Budgeting Strategies Going Into Retirement
When setting up your budget, you’ll want to accomplish two goals. Firstly, you’ll want to maximize the funds you have access to, and secondly, you’ll want to minimize the rate at which you use your funds. The rest of this guide will address one of these two needs.
Understanding the Costs and Your Options
Understanding what assisted living costs are is critical to figuring out how to afford assisted living. Factors such as location, amenities, services provided, and level of care required all affect the final price. It may be necessary to shop around to find a community that best fits your needs and spending power.
According to IBISWorld’s reporting, there are 19,324 retirement communities around the United States as of 2024. That massive variety already gives retirees plenty of options as far as costs and geography are concerned. However, that’s not where your freedom to choose ends.
You may also choose to live in an assisted living community that caters only to your core needs and outsource the extras to third parties. For other people, paying for an all-inclusive package may be more affordable.
The Power of Downscaling
Many people have “assets” such as cars or boats that are a net cost to keep. Selling or trading such possessions for cheaper variants can give you a bonus cash injection. These steps can also put money back into your annual budget.
The further away your retirement is, the more time you have to save, invest, plan, and allow your investments to compound. This same rule applies to cutting unnecessary expenses out of your life. Downscaling sooner will enable you to re-invest some of those funds for longer, giving you the benefit of more interest upon retirement.
Strategic Asset Management
Whether you’ve been a moderate to a fervent saver leading up to your retirement, the change in your lifestyle should also prompt a change in your asset management approach. Most retirees will have at least one of these types of assets or income sources:
- Real estate
- A pension of some kind
- Social security funds
- An IRA or a 401k
- Part-time or contract work
The way you handle your assets or income sources can increase your earnings. Before retirement, you can still be more aggressive with your investments (but you don’t have to). However, chasing high-risk gains is not a good idea once you’re drawing your income from those assets rather than employment.
Instead, consult with your financial advisor to see if it would be better to insulate your investments from market fluctuations. That low-risk stance reduces the risk of running out of money during retirement. You can also further decrease this risk by using pension funds, social security, and other forms of income to cover daily living expenses.
Real Estate Uses
Property can add money to your budget in two ways. Selling property gives a huge, upfront cash injection (as well as eliminating upkeep costs). This can be a great way to get rid of debt if your debt is a big enough problem.
However, renting the property can provide a source of monthly income that adapts to inflation. Ask an expert how your property can serve you as you move toward retirement.
Protecting Your Assets With Insurance
Insurance can directly or indirectly shield your assets from substantial potential risks. A medical catastrophe or a personal injury lawsuit can cause you to lose a considerable portion of your retirement assets. Ensure you don’t stop paying for insurance prematurely so that you’re not at risk of massive, unforgiving losses.
Debt Restructuring
Smart Asset reports that around 60% of retirement-age Americans still have some form of debt! If you struggle in this category, then debt counseling and restructuring is a good idea.
Many services provide financial planning for seniors with severe debt. One of their financial advisors can take you through many points in this article if your financial situation feels overwhelming. There are also similar services specifically aimed at resolving tax-related debt problems.
Getting rid of debt can mimic the effects of investing. For example, the more debt you pay off, the more money you’ll have in your budget in subsequent months.
Cost Reduction: Finding Financial Assistance for Assisted Living
Another step you can take in your retirement financial planning is getting long-term care insurance. Long-term care insurance policies cover you in situations where, though you might need the extra help, traditional medical insurance policies don’t help. These tend to be situations where you, as the policyholder, need help with routine activities (a definition that includes assisted living needs).
There are also several options for people looking for assisted living financial aid. The Federal Government offers Supplemental Security Income and Veterans Benefits to the relevant classes of retirees. People who need extra help paying for assisted living care can always check if there’s a state or Federal program that may help.
Take the Stress Out of Retirement
Taking proactive steps in your retirement financial planning can yield incredible results. If you aren’t a finance guru yourself, find a financial advisor to help you implement some of these measures:
- Learn more about assisted living costs
- Set up an air-tight budget
- Put all your assets to their best possible uses (even if that means downscaling in some places)
- Get rid of debt
- Get long-term insurance or financial assistance for assisted living if you need to
At Baker Place Assisted Living, we’re ready to give you an exquisite assisted living community with an affordable price tag. Our goal is to make your retirement years stress-free. Contact us today to learn more about our assisted living options and other senior living advice.
