For many Americans, living on $45,000 a year in retirement represents a significant drop in income versus when they were still in the workforce. Median earnings in the United States are $1,100 a week or $57,200 a year, according to the latest data from the U.S. Bureau of Labor Statistics. An annual retirement income of $45,000 represents a cut of about 20% — which is challenging enough financially, even if you don’t want to live like a wealthy person.
That doesn’t mean you can’t pull it off, though. It just takes the right strategy.
Your first order of business is to find a place where $45,000 can go a long way. This usually means avoiding big coastal cities with high costs of living and relocating to cities that don’t break the bank.
To pinpoint the cheapest places to retire, GOBankingRates recently analyzed and ranked the 100 biggest U.S. cities based on the annual retirement income needed to cover basic costs, including housing, healthcare, groceries, transportation and utilities. Cities were also ranked based on livability and were only considered if the percentage of seniors in the population was 10% or higher.
Toledo, Ohio, came in at No. 1 because of the low yearly expenditures required to live there ($37,645). Toledo’s overall cost of living is 27.8% below the national average, making it a good choice if you want to live rich off $45,000 in annual retirement income. Other high-ranking cities for affordability include Cleveland, Ohio; Memphis, Tennessee; Fort Wayne, Indiana; and Lubbock, Texas.
You’ve Retired in an Affordable Town or City… Now What?
Once you’ve found an affordable place to live, use whatever extra money you have to get rid of your debt — especially credit cards. Paying those off can leave more money in your wallet each month to help you live a richer lifestyle.
Along the same lines, you should get rid of unnecessary expenses. For example, if you have a second car, consider selling it. This will not only bring in some extra money but will also free yourself of maintenance, repair, fuel and (if applicable) auto loan expenses. Most retired couples can get by with a single car, as you don’t have to drive to work anymore. You might even be able to get by with no car at all if you live where there are plenty of public transportation and rideshare options.
Another way to live rich off of $45,000 in retirement is to keep investing. This can help ensure that the money you have continues to grow. For the best results, consider hiring a financial advisor who can help you find the best places to put your money — and reduce the risk of being scammed.
Even if you’re leery of investing in stocks, consider investing in real estate and even small businesses. One way to get exposure to real estate without having to buy property yourself is to invest in a real estate investment trust. REITs are companies that typically own income-producing properties such as shopping centers, apartment buildings and industrial parks. Some also pay regular dividends.
Finally, retirement is a great time to take advantage of discounts — especially since so many of them target seniors. You’ll find discounts on everything from retail and restaurants to travel, groceries and entertainment/recreation. If your idea of living rich means traveling and taking in shows, then discounts can make if affordable even on a yearly retirement income of $45,000.
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