These days, many consumers are reeling from rampant inflation. And retirees with a fixed income are hit particularly hard.
If you’ve had to raise your 401 (k) or IRA withdrawals over the past few months to cover the cost of living, you’re in good company. But unfortunately, you may also be putting yourself in a position where you are spending your savings too quickly. If you continue on that path, you may end up running out of your nest egg over the course of your life.
A better bet? Make these lifestyle adjustments to preserve your nest egg more and avoid an even worse financial crisis across the board.
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1. Get back to work
Many people don’t like the idea of retiring after leaving their career behind. But if you continue to have to tap into your savings to make ends meet, it’s a move you should consider, at least on a temporary basis.
The good news is that today’s gig economy is booming, so the job you get in retirement doesn’t have to be the traditional one of answering the phone at the office or helping customers in a store. Instead, you can take a hobby you enjoy and turn it into a stream of income, such as selling baked goods for money or becoming a pet sitter if you enjoy taking care of animals.
You can also try to leverage some of your old job skills to start working as a retiree. If you are a former teacher, for example, you can sign up to become a substitute teacher at your local school or become a tutor. And if you have an accounting background, you can do freelance accounting jobs for local businesses that may not need a full-time numeric person, but still need help.
2. Resize your home
The decision to downsize is not an easy one to make. But if you’re quickly running out of your nest egg just to stay afloat and own a bigger house that costs a lot of money to maintain, it might be time to consider losing some square footage.
If you scale from a larger home to a smaller one within the same area, you could end up spending a lot less on everything from property taxes to insurance to utility costs. This may make you able to reduce withdrawals from your savings.
3. Monetize your home
Maybe you can’t bear to move out of the house, either because you are romantically attached or because you want to stay in your larger space in case your grown children decide to return. If scaling doesn’t work for you, try converting your home into a source of money instead.
You may be able to rent a finished basement or garage for a year while inflation is skyrocketing and use the rental income to pay the bills. You may also be able to rent a space in your driveway if it is large enough and you live in an area where parking is difficult.
Don’t reduce your savings too quickly
You might think that taking an extra $ 300 a month or $ 400 another month out of your savings isn’t a big deal as you try to get through inflation. But remember, we don’t know how long we’ll be struggling with the rising cost of living. And if you want to avoid a money crisis later in life, then you’ll need to find ways to limit the extent to which you touch your nest egg, even if it means making other sacrifices.
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