How to retire well without a million dollars
When planning for retirement, it’s easy to target the “magic number” — like $1 million — because it seems like that’s what other savers are doing. But it is possible to retire with or without a large nest egg. Doing so requires taking a close look at your lifestyle and expenses.
Some people can happily retire on less than $1 million if their priorities don’t include a luxurious lifestyle. Here’s what you need to know about retiring on a low income.
Think again about what you mean
Your needs change over time, and acknowledging those changes can help dispel the myth that you need $1 million to retire. For example, when young adults start families, they often buy houses that are large enough to accommodate multiple children.
However, that same house can feel empty when the children become adults. Downsizing can make sense, and offering a smaller home can lower your monthly payments.
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Cut Costs, not Happiness
Cut back on activities that don’t enrich your life to save money. Getting rid of unused subscriptions and memberships, for example, and investing instead will give your portfolio mileage. Choosing tiers that don’t cost a subscription or membership is another option. The lower your expenses, the more likely you’ll be able to cover them with social security paychecks and other forms of cash.
Review your credit card statements to check for unnecessary charges.
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Make your salary work harder
Instead of completely planning your career, you might want to think about retirement. A part-time or side job can bring in extra income while allowing you to enjoy retirement. These gigs can align with your hobbies and passions, making work fun instead of boring.
You can also put your money to work in assets that generate cash flow, such as dividend stocks and bonds. And income can serve as a solid source of cash flow if you have enough cash to buy a small or existing property. Some retirees list their properties on sites like airbnb and rent out one of their rooms. This gives you the flexibility to make certain days and weeks unavailable for booking.
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Redefining success
How much do you really need? The answer will be specific to you, your situation (such as when you plan to retire) and your goals. Some people will be able to buy a few tangible things and be happy, allowing them to use that extra money to pay off their debt or invest, and need a little room for spending money. Financial security can translate into emotional security, which may be more important than any material possessions.
So remember that even if it seems like everyone around you is aiming to have $1 million in retirement, that particular goal may not be necessary – or even make sense – for you.
