If you’re struggling to either save for retirement or spend less during those years, you aren’t alone. A GOBankingRates.com study found one-third of Americans have $0 in retirement savings, and 23 percent have less than $10,000 saved.
Aside from the standard employer-sponsored programs — like 401k and pension plans or self-funded plans, like IRAs — there aren’t a ton of new retirement savings plans coming out of the financial industry. Therefore, it’s up to you to find creative and resourceful ways to prepare for retirement.
Here are 25 brilliant ideas that will help you save more and live well during your golden years.
1. Retire Abroad
Living overseas during retirement can dramatically decrease the cost of living, as well as improve your quality of life. According to the Social Security Administration, nearly 550,000 retirees live abroad, some cashing in on more favorable exchange rates by moving to locations like Mexico.
William Seavey with Crisis Response Publishing, who has advised retirees on how to relocate from urban areas to small towns, has a home in Baja, Mexico he built for just $25,000.
“You won’t spend much more than a few hundred dollars a month once your house is paid for,” he said. “I call it the poor man’s Hawaii — it’s one of the safest parts of all Mexico.”
Seavey recommended retirees research the communities they might want to consider, including spending time in each city during the summer and winter months, as well as checking out the city’s Chamber of Commerce websites, online newspapers, blogs and online communities to learn more.
2. Move to a Tiny Home Community
Joining the tiny home movement can save you even more and help provide a sense of community once you’ve stopped working and your children have moved out. These types of homes range from 100 to 400 square feet, are inexpensive to build and easy to maintain. Some are even mobile, which appeals to many people who dream of traveling during retirement.
And, this trend is already catching on with many retirees. According to AARP, roughly two out of every five tiny house owners are over the age of 50.
Ken and Sandy Lewis, for instance, built their tiny home four years ago, just before Ken retired from a career in real estate. “We pay about $12 a month in utilities and have a tiny maintenance budget," said Sandy. "Plus, we can deep clean the house in under an hour. We feel so much freedom having less stuff — we finally have time to pursue creative projects and passions.”
3. Spend Some Money Before You Retire
It might seem counterintuitive, but Joe Roseman of O'Dell, Winkfield, Roseman and Shipp said soon-to-be retirees should start spending their money now, also known as the “Go! Go! Go!” years.
“We believe that the last three to five years that our clients work, they are in great health, have built up vacation days and should take one of those once-in-a-lifetime dream trips,” said Roseman. “You should spend some of your money in the Go! Go! Go! years doing what you want to do. Know that if you don't spend it, your children will. I promise!”
If spending more before and during your first years of retirement seems out of budget, Roseman said it’s totally possible — as long as you plan for it.
“Traditionally, the old financial planning models told us that we could live on 70 percent of our pre-retirement income,” said Roseman. “During the Go! Go! [Go!] years, I find that our clients sometimes actually spend more for a couple of years because they are traveling more, enjoying life more. If we put the proper plans in place this is all very doable.”
4. Put Your Legal Documents in Place Now
Roseman also said everyone should have at least a will, living will, durable power of attorney and healthcare power of attorney in place.
“Whatever age you are, don't wait," he said. "There is no guarantee that you will make it to retirement. A living trust is also a good document to look into because of its ability to avoid probate and lower estate settlement costs.”
Having a will or trust can also save you on taxes because most estates are entitled to a generous tax exemption. You can give yourself income during retirement while still leaving your money or assets to your heirs tax-free after your death.
If you think you don’t have enough money to need a will or trust, think again. The value of the equity in your home, retirement accounts, life insurance, inheritance, cash accounts, appreciating investments, your cars and all your other belongings are calculated in your net worth.
5. Prepare for Tax Changes
It’s important to know that taxes, particularly income taxes, are going to change during your retirement. During your working years, you have — hopefully — made regular contributions to retirement accounts that also lowered your taxable income. When you retire, you stop making those contributions and start collecting the money, which could increase your taxable income.
6. Save for Retirement Over College
Saving for your child’s education is a noble cause, but not if it puts your retirement at risk.
“Putting a lot of money into a college fund isn’t going to help if your retirement savings suffers as a result,” said Sally Brandon, vice president of Rebalance IRA. “Your future student can take out loans, apply for grants and win scholarships that offset the costs of higher education. You, on the other hand, can’t borrow to finance your retirement. In fact, borrowing against your 401k or making early withdrawals from an IRA should be a last resort because you’ll take a big tax hit.”
If the thought of not helping your child get through school isn’t an option, consider making a compromise — one that won’t cost you your retirement.
“Tell your children that you’re going to pay a portion of the cost of education,” recommended Brandon. “Set a budget for what you can afford, and if you have extra money after putting away what you need for retirement that month/year, so much the better.”
7. Keep Working
Working during retirement is a great way to supplement your income, but there are also two other important benefits: It helps you stay engaged, and it prevents you from spending money.
Joe Duran, founder and CEO of United Capital and author of the best-seller "The Money Code," said, “Years ago, the typical retirement length used to be 1.7 years. You didn't need a lot of retirement savings, and pension plans worked. People don't have pensions today. Being 65 years old today is radically different than it was 20 years ago.
"People aren't just working longer to make money; it's to stay connected with the world and avoid spending money," he added. "Those both have massive implications in actually living a fulfilling retirement rather than doing absolutely nothing."
8. Give to Charity
Rather than selling stock or pulling from your tax-deferred accounts, some retirees choose to make one large donation of shares to take advantage of the charitable donation tax break, which allows you to deduct a certain percentage of your donations from your taxes.
“Donating highly appreciated shares of stock is an attractive way to fund a large donation,” said Patrick Ritter, CFP with Fiduciary Advisors, Inc. “You both avoid the capital gains due if you sold it yourself and deduct the full fair market value of the shares donated to benefit your tax return filed the following April.”
In addition to stock, retirees can also donate appreciated property, like jewelry, real estate, art, antiques or securities for tax savings.
9. Stagger Your Spending Plan
“Unfortunately, many retirement spending calculators and graphs simply have an upward spending curve from the '60s through the '90s,” said Mark Zoril of PlanVision. “The curves and graphs are designed to sell retirees products they may not need. No one spends money like that. It changes from year to year and goes down later in life."
Instead, plan your spending based off how active and healthy you think you will be during retirement. “I always encourage my clients to plan on spending quite a bit more money from their mid-60s to their early 80s,” said Zoril. “Typically, this is the period in which they have more energy and appetite for travel and activities.”
He added: “The big unknown would be healthcare. If they have a chronic care situation later in life, this will obviously be [a] very different experience.”
10. Pick Up Side Gigs
If working full time isn’t part of your retirement plan, working part time might be a better way to make money and have fun. Many retirees prefer to take on light work or explore an untapped passion, like dog walking or tutoring.
Peer-to-peer services like Rover.com connect pet parents with locals willing to provide in-home care and walks for pups. Tutors, meanwhile, can make anywhere from $9 to $20 an hour.
11. Overestimate Healthcare Costs
Whether you're just in the planning stages or you’ve already left the workforce for good, estimating your healthcare costs is a major cost to consider during retirement. According to Fidelity, a 65-year-old couple that retired in 2015 will need $245,000 to cover future medical costs — not including the cost of long-term care. Many workers and retirees are totally unprepared for this cost, which can completely wipe out their savings.
“Most people, especially healthy ones, will underestimate the potential cost of healthcare, which can be financially devastating. Don’t assume just because you’re healthy now that you will continue to be throughout retirement,” said Ash Toumayants, financial advisor and founder of Strong Tower Associates.
12. Unplug From the Habit of Saving
Once you're in the habit of saving for retirement, it’s easy to put everything on auto pilot — you have a little going into your 401k, an auto payment to an IRA and maybe even some regular stock purchases. But this good habit can turn on you if you don’t keep an eye on things.
“Some people will take an income from their 401k that they may not necessarily need to live on and begin putting that into a savings account,” said Toumayants. “Psychologically, you feel good about growing your savings account but in actuality, you’re taking funds from a higher producing asset into something that is giving you little to no return on investment.”
Instead, do yearly financial check-ups of your retirement savings accounts and make changes as necessary.
13. Sync Up With Your Spouse
It’s always a good idea for spouses to be on the same financial page. In fact, it’s even more important in retirement to make sure both parties know how money is being managed — and spent.
“When both parties were working, you [could] get away with dividing assets into separate accounts and having some autonomy with your funds. This becomes much more difficult during retirement,” said Toumayants. “It’s more important than ever before that the two parties stay connected and communicate what is going in and out, money wise. While the transition into sharing retirement money is definitely difficult at first, it’s crucial for healthy retirement planning and spending.”
14. Sell Your Old Life Insurance
“Most people don't know that they can actually sell their life insurance policy,” said Lingke Wang, co-founder of Ovid Corp. “If you have an old policy that you no longer need, you can sell it for an upfront cash payout to a third-party investor — typically a large financial investment firm. This is officially called a life settlement, and consumers that qualify get on average 20 percent of their policy benefit paid out.”
This doesn’t mean you should go ahead and cash out a policy you have invested a lot of money into.
“Generally, people do this if their life insurance is no longer affordable or their policy is no longer serving its purpose,” said Wang. “For instance, some policyholders originally purchased life insurance to provide financial security for their children in the case they passed away. But paying for the policy often becomes less worthwhile once their children have grown up and become financially independent.”
Find Out: How Much Money Do I Need to Retire?
15. Create Passive Income
“The happiest people I've seen during retirement are those who have set up passive income streams during their working lives,” said Mike Scanlin, CEO of Born To Sell. “Saving is good, but investing in things that produce income is way, way better.”
You don’t have to have a ton of capital or real estate to bring in passive income during retirement either. “Passive income can come from anything that brings in a monthly or quarterly check,” said Scanlin. “This includes real estate, oil/gas wells, MLPs, covered calls on blue chip dividend paying stocks, owning content-based web sites that are ad and affiliate supported or bonds, although those don't pay as much these days.”
16. Housesit and Travel the World
Many retirees dream of traveling the world, which can quickly eat into your budget if you aren’t careful. With a little bit of creativity, you can fulfill your travel dreams and keep a lid on your spending.
"You can travel cheap by house sitting instead of paying for a hotel each night," said Scanlin. "You might need to take care of the owner’s pets, but if you like cats and dogs then that could actually be a plus."
17. Find a Retiree-Friendly City
When it comes to retiring in style, not all cities are created equal. Yes, there are changes you can make to your budget and lifestyle, but you might get a bigger bang for your buck by moving to a retiree-friendly city.
AARP works with dozens of cities and towns to help them become attractive places for older adults to retire. Some features the organization is pushing include improved public transportation, senior services, walkable streets, housing, community activities and job opportunities for older workers.
18. Join the Sharing Economy
The sharing economy isn’t just for hipsters — retirees can also use this outlet to make money. Recently, George Takei, of "Star Trek" fame, starred in a humorous AARP video promoting sites like Airbnb and Lyft as a way for retirees to bring in additional income.
And if you don’t feel like sharing your home or driving people around, you can rent out items like tools, garage space or even extra parking. This might not bring in big bucks, but it’s an easy way to supplement your income or boost your retirement savings.
19. Invest in People
If you’re looking to diversify your retirement savings, it’s now possible to invest in the future income of up-and-coming tech superstars and creatives. Companies like Upstart and Pave offer these “human capital contracts,” which allow you to invest in the future careers of others in exchange for a share of their future earnings. You put up the money early in their lives, when they need it most, and hopefully you’ll get a return on your investment later in life, when you need it most.
This type of investment doesn’t go without its risks, of course, and some critics say these type of contracts sound like indentured servitude. Still, this is a new and emerging way to diversify your investments and maybe make more than you would with the standard mix of stocks and bonds.
20. Rent Instead of Own
If your home is large or expensive to maintain, selling it and renting could save you thousands of dollars each year. Instead of being financially responsible for every expense, you can pass that cost on to the landlord or property manager. You also won’t have to worry about property taxes, insurance and possibly even utilities.
Granted, if you've paid off your mortgage, and you don't pay a king's ransom in property taxes and maintenance, then it probably makes sense to stay in your home.
21. Ditch Your Car
From car payments to insurance, registration fees and gas, owning a car is expensive, even if it’s in perfect running condition. According to AAA, the annual cost of owning a typical car is $8,698. And those numbers don’t even include the cost of insurance, which usually goes up for drivers over the age of 65.
Once you retire, you won’t need a vehicle to commute to work. If you live in a city with public transportation or even need to fall back on taxi or Uber service, there’s a good chance you can save money by getting rid of your car.
22. Keep Your Taxable Income Low
The total Social Security benefit retirees receive varies, depending on how long they worked and how much they contributed. For retirees with low income, they can usually avoid paying income tax on this benefit. However, if you receive more than $25,000 a year, or $32,000 if married and filing joint, you’re going to lose part of that income to taxes.
However, there are creative ways to avoid paying too much tax on your Social Security income. For example, instead of taking taxable distributions from a 401k or traditional IRA, you might want to use a Roth IRA instead, which offers tax-free withdrawals during retirement.
23. Set Up a Retirement Paycheck
Instead of giving yourself unlimited access to your retirement funds, you might want to set up a “retirement paycheck.” You can structure regular direct deposits from your investments into your checking account just like a regular paycheck.
You can also have any federal and state taxes taken automatically taken out of each “paycheck,” which can help you avoid a big tax bill at the end of the year. This type of setup is called a “systematic withdrawal,” and many mutual funds offer this service to clients.
24. Save Smart
Saving money is hard, but there are several new services that make it a lot easier and relatively painless. Services like Digit and Acorns analyze your bank transactions and automatically save or invest money based off your spending history. The transfers are so small you’ll hardly notice a difference.
25. Get a Reverse Mortgage
Instead of paying off their house or downsizing, some retirees choose to get a reverse mortgage instead. A reverse mortgage allows retirees aged 62 and older to take out a loan on the equity they’ve built up in their homes. Instead of making payments on your house, you get a monthly check from the lender. You don’t have to pay back your reverse mortgage as long as you continue to live in the house and don’t sell it. The bank gets its money back once you sell the home, no longer live in it or have passed away.