Retirement Savings: 7 Things To Do If Your Nest Egg Is Dwindling
Written by
John Csiszar
Edited by
Chris Cluff
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Even the most well thought out retirement plan has plenty of variables that can’t be predicted with certainty. Trying to project investment returns, inflation rates, lifestyle changes and financial emergencies over a multi-decade time period is inherently fraught with uncertainty.
So, if you find yourself coming up a bit short when it comes to your retirement income, you’re not alone. But it is important that you take steps to make up any income shortfall as soon as possible so a leak doesn’t become a flood. Here are some suggestions.
Stop the Sinking
The first step you should take if your retirement savings are dwindling is to stop running a deficit. Institute a spending freeze as much as possible so you can then take the time to determine where you’re coming up short.
Otherwise, you could run through even more of your savings, which in turn would make it more difficult to recover. As the age-old expression goes, “If you find yourself in a hole, stop digging.”
Review Your Budget
Once you’ve slowed your spending, it’s time to go through every line item in your budget to see where you could possibly cut back. First, compare the amount of income coming in with your expenses going out to see how much of a hole you’re in every month.
Next, look at your expense categories and see where you can make some cuts. Perhaps you have more streaming subscriptions than you think, or maybe you’re overspending on dining out or travel. While no one likes to make cuts to their lifestyle, if you’re running a deficit, you’ll have to balance out the books one way or another.
Downsize
One of the easiest ways for many retirees to improve their financial situations is to downsize. Although not an option for everyone, many retirees occupy large homes that used to house families and they now find themselves living alone or with a spouse only.
Downsizing from a four-bedroom house to a two- or one-bedroom can not only put cash in your pocket but also save on your monthly utility and maintenance bills. For many retirees, this simple step is more than enough to stave off declining savings.
Move to a More Affordable Area
If downsizing isn’t enough to do the trick, you might have to take the more drastic step of moving to a more affordable area. While moving might not be your first choice, you might find that in addition to saving you money, it changes your lifestyle for the better.
Perhaps you can move closer to friends or relatives or even into an active retirement community that enriches your life. Or, if you originally moved for a job, moving to a place you actually want to live might save you money and make you happier at the same time. Whatever the reason, moving to a lower-cost area can often be enough to solve any retirement savings problems.
Find a Roommate
While you might think that your days of having a roommate are behind you once you’re retired, letting someone else move into your home might solve two problems at once. First, you’ll be saving half off the cost of your monthly expenses, from utilities and maintenance to rent or mortgage, if you’re still paying those.
Second, if you pick the right roommate, you’ll have someone to spend enjoyable times with as well. If you’re a widow or widower and/or your kids have moved out of the area, having an extra friend in the house may be good for your mental health.
Earn Extra Income
If you can’t solve your cash-flow problems on the expense side, you might have to take steps to increase your income. Fortunately, getting a side gig has never been easier. Working part time at a local store, taking dogs out for regular walks or working online as a tutor or consultant can quickly add a few hundred to a few thousand dollars of income to your bank account every month.
Tap Home Equity
If your home is fully paid off, you may be able to tap some of the equity in your house to offset your dwindling savings. A home equity loan, cash-out refinancing or reverse mortgage may allow you to turn your home equity into cash in your bank account, potentially solving all of your savings problems.
Just be aware that each of these strategies has its own drawbacks and that you should consult with an expert before you jump into any of them.
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