The reality of retirement almost never matches the preconceived fantasy of it. Over 25% of retired Americans feel that their retirement does not match their original expectations. Most retirees need at least $45,000 to retire modestly in a large American city. The cost of living is always steadily rising. And if you are not careful, your retirement funds can run out quickly. Here’s how to retire well on $30k annually.
Learning how to retire well requires strict financial discipline and sacrifice. After all, this money is designed to last you throughout the entirety of your retirement.
The average person lives to be 80 if they are lucky. But many Americans are living into their 90s and longer due to medical advancements.
Learning how to retire well on $30k per year should predispose you to become a minimalist. Own fewer things and eschew buying brand names.
Start downsizing your life. Downsizing is the practice of aggressively living below your means to save as much money as possible. It’s looking at every aspect of your life to find out how to make dollars stretch longer.
Sell your house and move into an apartment. Or sell your car or begin carpooling.
Buy generic consumer products whenever possible. You can save over $1,000 annually by buying only generic products at the supermarket.
Make sure you ask your doctor or pharmacist for generic versions whenever you get a prescription. You can save anywhere between 20% to 70% on generic meds. If senior citizens strictly spent their Medicare Part D on generic meds, they could collectively save almost $1 billion annually.
Take a look at your household budget and spending practices and strategize how you can begin downsizing your life.
Update Your Insurance Policies
Many Americans loyally keep their insurance policies while insurance companies regularly change their terms or increase prices which could affect your own policy.
Learning how to retire well means that you should be loyal to your own financial bottom line and no one else’s. Especially an insurance company.
An insurance product is a product, like a consumer good that you buy in a store. You should regularly compare prices, change, or end policies when needed. If you don’t have insurance yet, try Haven Life. They have a diverse team of professionals dedicated to making a better experience for anyone who wants life insurance.
You should compare auto insurance prices every 24 months. Then you can switch coverage plans if necessary to save money. Make sure you are not spending more than necessary.
And ask your provider if you qualify for any benefits or perks. Many auto insurance companies don’t advertise membership perks and require policyholders to ask.
Consider canceling your life insurance if needed. Your spouse’s plan may have you covered. Or you may not need it if your children are grown and have their own plans.
And look over every policy you have to make sure that ex-spouses or non-preferable people are not still listed as beneficiaries.
You may be able to convert a life insurance policy into a supplemental income. Call a representative and ask.
Just never assume you must keep an insurance policy on anyone else’s terms, no matter how old you are.
Live Internationally in a Low Cost of Living City
Learning how to retire well requires you to adapt to situations as they are, not how you want them to be.
It costs a lot of money to live in the United States. The average retiree may need at least $45,000 annually to live in a population-dense and large metropolitan city.
There are many small, rural American towns and cities that you can learn how to retire well on $30k annually. However, they may be uninteresting, remote, and aesthetically unpleasant places to live.
Depending on the currency exchange rate, your dollar can last longer in a foreign country. A $30k retirement could last years or decades if you have a regular income of $2,000 or more every month.
You need to do your research, but many foreign cities have a low cost of living standards, adequate medical care in large cities, and large expatriate enclaves.
You could live in Belize, Panama, or Ecuador on $20,000 annually if you watch your costs. Each country also has special visa programs for foreign retirees that affords them discounts and benefits. Each of these countries uses the American dollar and English is spoken widely along with the native language.
If you want to be more adventurous, you could live in Asia. Depending on when Covid-19 restrictions end, you could live in the Philippines, Thailand, Malaysia, Indonesia, or Vietnam very cheaply.
Of course, there is a tradeoff in these situations.
You would have to learn a new language and adapt to a new culture. While your $30k retirement nest egg will last longer, the standard of living will be lower. Societal infrastructure and bureaucracy will be of a lower standard than you’re used to.
Delay Social Security Payments Until Age 70
Mastering the art of delayed gratification is one of the best ways to learn how to retire well on a $30k retirement.
For example, you must be at least 62 to begin collecting your Social Security benefits.
But you can delay receiving your Social Security benefits until age 70 and then receive 132% on top of your expected benefits.
Why? You will have a guaranteed income waiting for you at a later age while you strategically learn to live on $30k per year in the meantime.
You should have a weekly, monthly, and annual household budget. Adapt, review, and update as needed when your personal circumstances change.
Get a financial advisor. Begin saving money years or decades before you retire.
How much money you save for retirement is not as important as what you do with that money during retirement.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.