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Four Ways To Prepare For A More Affordable Retirement

By Jeffrey J. Brown, MD, MBA, CFA®, CFP®

What does your ideal retirement look like? Traveling? Volunteering? Spending time with family? Taking up a new hobby? The possibilities are endless, and getting to cross some goals off your bucket list probably sounds exciting. But no matter what your ideal retirement looks like, we can all agree that it will be expensive. What if there were steps you could take now to actively reduce the amount of money you’ll need in retirement? The good news is that there are! Today we’ll discuss four ways to prepare for a more affordable retirement.

1. Pay Off Your Mortgage

Your mortgage is may be your largest recurring expense in retirement. Getting rid of this payment before you enter your golden years can significantly reduce the amount of money you need each month.

Start by calculating how much extra money you could throw toward your principal. Could you make one extra payment every few months? What about one extra payment a year?

If there’s not a lot of wiggle room in your monthly budget, consider cutting down on discretionary expenses or earmark any extra money you get from bonuses or tax refunds for your mortgage. Every little bit counts.

An alternative strategy is to minimize your monthly payments by refinancing at today’s historically low rates. If you can secure a fixed-rate mortgage at an interest rate barely above the rate of inflation, it may be fine to pay it off slowly even if your monthly payments persist into retirement.

2. Downsize Or Relocate

If you’re still living in the same house where you raised your family, there’s a good chance you don’t need all that space. Downsizing may seem extreme, but it’s a quick way to reduce your long-term retirement costs, lower utility bills, and pay off debt. Plus, a one-story house with a smaller yard may be easier to keep up as you age.

If you’re not tied down to your current city, take it a step further by relocating to an area with a lower cost of living. You might be surprised by how much further you can stretch your retirement dollars. For example, a $1 million nest egg lasts around 13 years in California, but 23 years in Mississippi. (1)

3. Travel During The Off-Season

Ask 50 people what they plan on doing in retirement, and most of them will say travel. Whether it’s traveling across the country to visit the grandkids or traveling to see the Eiffel Tower, it’s on everyone’s list—and for good reason. After working 30+ years, you deserve to go to all those places you’ve been dreaming about.

If you want to stretch your travel budget, consider traveling during the off-season. It has many perks. Not only are airlines, hotels, and activities cheaper, but you beat the crowds too! Plus, you have extra money left over to jump-start your next trip.

4. Delay Social Security

The average life expectancy is 84.3 for men and 86.6 for women. If your health and family history indicate that you may live this long (or longer), delaying Social Security until age 70 could be highly beneficial in retirement.

For example, the chart below shows how much your monthly Social Security payout would be if your estimated payment was $2,000 at full retirement age (66) and if you claimed benefits at ages 62 and 70.*

By waiting until age 70 to claim your Social Security benefits, you would earn $1,140 more per month than if you claim your benefits at age 62.

How We Help You Prepare For A Secure Retirement

As you can see, there are many ways to prepare for a more affordable retirement. At Shearwater Capital, we can help make sure you have sufficient income to live comfortably after you stop working. We’re passionate about helping you live your ideal life in retirement after a career spent serving others.

If you’d like to chat with a financial professional about your current situation, we invite you to book a no-obligation conversation. To get started, schedule your introductory phone call online or contact us at (314) 434-4750 or today.

About Jeff

Jeffrey Brown is principal and chief investment officer at Shearwater Capital, LLC, a fee-only fiduciary financial advisory firm helping physicians and their families attain financial security using a scientific, evidence-based approach. Jeff has been a practicing radiologist for over 30 years and is currently chair of the Department of Radiology at Saint Louis University School of Medicine. He earned his bachelor’s degree in biology from the University of California, Irvine and his medical degree from the University of California, San Diego. He has been named one of St. Louis’s Top Doctors every year since 2011 in St. Louis Magazine. Jeff saw a need for physician-tailored financial services and earned an MBA from Washington University in St. Louis, going on to found Shearwater Capital, LLC with fellow MBA classmate and radiologist, Eric Malden. Jeff is a Chartered Financial Analyst (CFA®) and CERTIFIED FINANCIAL PLANNER® (CFP®) practitioner. Learn more about Jeff by connecting with him on LinkedIn.



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