Loading
Tap on the profile icon to edit
your financial details.

Regardless of your age, your retirement will be here before you know it. Hopefully, you’ve been actively saving for years.

As your golden years approach, consider this: The average life expectancy in the U.S. increased dramatically from about 70 in 1967 to about 80 in 2017. Those who reach age 65 also have a one in five chance of living into their 90s.

A longer life is great news. You have time to check more off your bucket list, but it also means you need to plan for a longer retirement.

For example, if you retire at 65, a 30-year retirement is quite possible. But even if you save $1 million for your retirement, you have to make sure to budget it out so it lasts.

Start taking these 11 steps today to make your retirement savings last throughout your golden years.

1. Start Earning Serious Interest on Your Savings

Imagine $28,243 more dollars in your bank account. That’s the interest income you would earn with an additional 1% in interest on a $100,000 deposit over 25 years.

Even if you don’t have that much to put into an account right now, the concept holds true for any amount of savings.

Don’t leave money in a checking account because you think interest rates are too low to make a difference. That is just not true.

A high-interest savings account can earn you nearly 2% interest and you can still have unrestricted access to your savings.

To put that into perspective, the national average savings account rate is 0.08%, according to the FDIC. By choosing an account that offers the highest rate, you can earn a lot more.

Think about it this way: If you have $20,000 sitting in an account earning 0.06% interest, you’d earn about $12 annually. An account with 1.85% interest would earn you $370.50. That’s without any additional deposits and for just one year. After a few years, the returns would really add up.

Or consider this: Say you’re 50 and want to retire at 65. If you open the same high-interest account with the same amount and contribute $1,000 a month, you’d end up with $233,551 — more than $33,000 in interest alone. With the old savings account, you’d only end up with $200,000, with $988 in interest.

Try This: Open a high-yield savings account. This CIT Bank Money Market Account offers 1.85% interest and doesn’t charge any service fees. You can open an account with a $100 minimum deposit.

2. Plan Like a Professional

First and foremost, if you want to get an accurate picture of your expenses and retirement needs, we recommend speaking with a financial advisor that specializes in retirement planning.

Their job is to help you manage your personal finances and reach your goals. Dealing with your day-to-day finances is not always a challenge. But getting yourself prepared for retirement is difficult to face alone.

An advisor can offer advice on how to optimize your retirement account contributions, tips for navigating taxes and hidden fees and can help you feel more confident about your retirement plan.

A Voya Financial report found that only about 28% of people consult a financial advisor. While using an advisor may cost money, the report found that 79% of people who use one said they “know how to pursue achieving their retirement goals.” The study also found that 59% of those who use an advisor have calculated how much they need to retire, while 52% had a formal retirement investment plan in place.

Try ThisFind a financial advisor. We’ve made it super easy to get in touch with one. We actually designed a tool to match you with the top financial advisors in your area.

Follow these steps to find an advisor near you:

  1. Answer these few easy questions about your current financial situation.
  2. Our tool matches you with up to three advisors who can provide expertise based on your specific goals. You don’t have to spend hours interviewing dozens of people and firms.
  3. Check out the advisors’ profiles, interview them on the phone or in person and choose who to work with in the future.

3. Have the Right Life Insurance Products

If you still have dependents and haven’t considered life insurance, it’s probably time. Should something happen to you, a life insurance policy helps provides financial protection to those you love. Life insurance helps make sure your loved ones are taken care of after you’re gone — it helps provide security to those who mean the most to you.

You may already have life insurance through an employer, which is great, but your policy probably won’t follow you if you switch jobs or retire. That’s why you may want to consider your own policy, independent of any employer. Also, an employer-provided policy is sometimes only up to double your annual salary. Most financial experts recommend term life insurance coverage that’s equal to five to ten times your yearly pay.

The primary consideration with life insurance is how large a policy you need. Your ideal policy size depends on multiple criteria including how much you make, your assets, any debt you have, your age, among others.

Try this: Find the right life insurance products for you online.

Backed by Massachusetts Mutual Life Insurance Company (MassMutual), Haven Life Insurance Agency has changed the term life insurance application process and moved it online. You can get an immediate quote for up to $3 million in term life insurance coverage issued by MassMutual (age limitations apply), and receive a decision on eligibility in minutes.*

Haven Life offers affordable rates, an easy online process and protection beyond life insurance with its Haven Life Plus rider (included in the Haven Term policy), which offers policyholders access to additional benefits like a free digital will or online safe deposit box for storing important family documents.

To get an idea of how affordable term life insurance could be, a 35-year old man in excellent health could get a $500,000 / 20- year Haven Term policy for around $21 per month. To get an estimate on your price, all you have to do is answer a few questions and you’ll get an estimated quote.

4. Plan for Healthcare Expenses

Unfortunately, most people dramatically underestimate their healthcare expenses and overestimate how much help they will receive from Medicare. In fact, recent studies have shown that the average 65-year-old couple will need $220,000 to cover healthcare expenses in retirement.

Even with Original Medicare coverage, healthcare costs can quickly become incredibly expensive. In addition to the deductibles, monthly premiums, and coinsurance payments that enrollees are responsible for paying each time they access care, most people will also have to pay for additional services and benefits that are simply not covered by Original Medicare, like prescription drugs, vision, or dental care.

Fortunately, there are other Medicare coverage options that can help enrollees control and even cover a significant portion of these expenses. Because of the potential annual savings in out-of-pocket costs, all Medicare-eligible individuals should consider enrolling in a Medicare Advantage, Medicare Supplement, or Medicare Part D plan that meets their needs.

Medicare Part D and Medicare Supplement plans are purchased in addition to Original Medicare, and they can save enrollees thousands of dollars in out-of-pocket costs on an annual basis. Part D plans cover prescription drugs, while Medicare Supplement Plans can cover most if not all of your coinsurance and deductibles, as well as providing coverage for additional benefits not included under Medicare Parts A & B.

Medicare Advantage plans, which are sold by private insurance companies as an alternative to Original Medicare, are required to cover the same services as Medicare Parts A & B, but they also often include coverage for additional services, like prescription drug coverage, hearing aids, and vision or dental care. Most Advantage plans have a $0 deductible, and they are all required adhere to a set yearly maximum for out-of-pocket costs, which makes it easier to forecast your total health costs for the year.

It is important to remember that not all Medicare Advantage, Supplement, or Part D plans are created equal. Because they are offered by private companies, the additional services and prescriptions covered will vary from plan to plan.

Try thisRenew’s Medicare Shopping Site makes it easy to compare plans from top carriers in your area side-by-side, so you can ensure that you are getting the right coverage for you at the best possible price. Its site can also provide you with a personalized quote based on the prices of your prescription drugs.

5. Make Sure Your 401(k) Is Optimized

More than 168,000 people currently hold at least $1 million in their 401(k) accounts, according to Fidelity Investments.

Millions of people take advantage of employer-sponsored 401(k) retirement savings plans, the tax-deferred investment accounts that allow you to contribute up to $18,500 per year in pre-tax, interest-earning retirement savings.

Typically, an employer will have a set number of funds for employees to choose to invest in, many times matching up to a certain percentage of employees’ salaries, up to 4.7% in 2017, according to the Washington Post. These accounts provide one of the most efficient ways to save for retirement.

However, many people initially set up a 401(k) — choosing their contribution percentage and asset allocation — and then forget about it. Your account may still be growing as you continue contributing to it, but return rates can change over time, along with your risk tolerance. The state of the economy can also affect your investment account’s performance.

For this reason, it is important to check in periodically on your 401(k) to make sure it’s still aligned with your investment plan and timeline for retirement. If you find that it’s not, it may be time to make some changes, whether that means changing the ratio of stocks to bonds or investing in higher- or lower-risk funds.

Try this: Optimize your 401(k) account.

Going into your account and manually analyzing and rebalancing your investments can be time-intensive and complicated. But there are ways to make sure your account is always optimized for your goals.

An SEC-registered robo-advisor called Blooom can streamline the process. If you have a 401(k), 401(a), 403(b), 457 or TSP account, you can link it to Blooom, and the company will give you a free analysis, letting you know how it is performing and how its performance could be improved. It takes into consideration your target retirement age, risk tolerance and diversification. From there, if you decide to become a member, Blooom can make trades on your behalf so your account always has the right balance of stocks and bonds to help you reach your retirement goals.

6. Don’t Overpay On Your Taxes

Some common retirement tax mistakes include overpaying taxes on Social Security benefits, paying investment surtaxes, overpaying capital gains taxes, paying higher medicare premiums and paying penalties on 401(k) or other retirement account distributions.

As you withdraw money from your 401(k) and other retirement accounts, you will need to pay taxes on some or all of that money. You can lower the tax hit by withdrawing money from certain accounts in an informed way.

For example, money you withdraw from a Roth IRA is not taxable income. Money you withdraw from a 401(k) is taxable. Depending on how much you spend each month and the makeup of your savings, your tax situation could look quite different.

What is the best way to draw money from your accounts? The answer will vary by person, and this is another area where a financial advisor can really help you. In the years before retirement, they can explain how to allocate your savings so that you’re set up for retirement. Once you retire, an advisor can show you how to use that savings in a tax-efficient way.

Try This: Use this free service to find a financial advisor with tax expertise. Even if you ultimately decide not to engage a financial advisor, it can still be useful to speak with one to get a sense for their value.

7. Eliminate High-Interest Credit Card Debt

Making steep monthly payments on high-interest credit card debt can take a toll on what you’re able to save for retirement. Getting rid of this debt could free up more money you could funnel into your IRA, high-interest savings account or other investments.

One quick way to do this is to take out a personal loan, which probably sounds counter-productive. But it’s one of the speediest ways to rid yourself of credit card debt and could potentially save you thousands in interest payments.

Depending on your credit situation, personal loans typically have lower interest rates and monthly payments than credit cards and you can use them to pay off most or all of your debt in one lump sum. That way, your payments are all merged into a single account with your lender.

For example, you could take out a personal loan with a company like SoFi, which offers loans of up to $100,000 with a fixed-rate APY starting at 6.199% and payment plans of 3-7 years.

8. Downsize… Even if You’ve Paid Off Your Mortgage

Housing is one of the largest expenses for retirees. Even if you’ve fully paid off a mortgage, you can still have significant housing costs (think property taxes, insurance and maintenance).

Downsizing is one way to reduce those costs.

Many people buy their homes during the middle of their lives. That could be a time when you have children living with you or when you simply want a larger space where you can enjoy your life. As you get older and the kids move, a smaller space could be enough for you with your new lifestyle. It could also save you significant money.

The national average housing costs per year in retirement are $8,819, according to our own internal study using Bureau of Labor Statistic data. Multiply that by 30 years and you’ll spend an average $264,570.

Try This: Explore downsizing options and home values in your neighborhood. There are hefty transaction fees in selling your current home and buying another so we recommend targeting a home that is approximately 40% lower in price than your current home.

9. Refinance Your Mortgage

Are you still paying off your mortgage? You should consider refinancing.

This can lower your interest rate and save you money over the course of paying off your mortgage. In the current economy, where interest rates are still quite low, refinancing is a particularly useful tool for homeowners.

Refinancing a mortgage to a longer term can also help you free up money for you to use elsewhere. For example, let’s say you have 10 years remaining to pay off your mortgage and you refinance to a 15-year loan with a lower interest rate. Your new mortgage will be longer, but will also have lower monthly payments. That frees up money each month for you to put toward other expenses.

Try This: There are a number of factors to consider with refinancing, so make sure to do your homework. Start by using a simple mortgage refinancing calculator to see if it makes sense, mathematically, to consider refinancing.

10. Move to a Low Tax State

One way to lower your tax bill in retirement is to move to an area with lower tax rates. This will not affect federal taxes, but it can greatly lower your state and local costs.

Consider some examples of how moving may benefit you. The difference between the average property tax bill in New Jersey and the average property tax bill in Alabama is more than $7,000.

The average state and local sales tax in Louisiana is almost 10%, but four states (Delaware, Montana, New Hampshire and Oregon) have neither state nor local sales taxes.

The average costs of housing, food, transportation and medicine also vary by thousands of dollars in different states. The average Washington, D.C. resident pays 50% more for food than the average Mississippi resident.

Try This: Consider which state is the most retirement friendly. Even if you aren’t willing to relocate across the country, moving a few hours away to get over the state border could pay off in a big way.

11. Maximize Social Security Income

Social Security benefits are a major source of income for the average retiree. You can help yourself in retirement by getting yourself the maximum benefit possible.

To do that, you will need to work a bit longer and retire slightly later. Because the Social Security Administration pays your distributions based on your average salary over 35 years, it is ideal to work at least that long. If you don’t participate in the labor force that many years, you will decrease your payment.

It is possible to receive Social Security benefits starting at age 62, but that will decrease the size of your benefit by 20% to 30% of its maximum size. You can increase your benefit by working longer and waiting until after 65 to elect your benefits. Each year you work over age 65 (up to 70) can increase your benefit by as much as 8%.

Waiting to file for Social Security isn’t possible for everyone, but it will help you maximize your retirement income.

Try This: If your financial situation is relatively straightforward our Social Security Calculator will provide an accurate estimate on how election age may affect your Social Security income.

Next Steps

No matter how you look at it, planning for retirement is complicated. We recommend speaking with a financial advisor, and actually designed a tool to match you with the top advisors in your area.

Here’s how it works:

  • Answer these few easy questions about your current financial situation.
  • Sit back while our tool matches you with up to three advisors who can provide expertise based on your specific goals. It only takes a minute.
  • Check out the advisors’ profiles, interview them on the phone or in person and choose who to work with in the future.

Want more retirement advice?

Check out these other helpful articles:

Disclosure:

Some of the offers that appear on this site are from companies from which SmartAsset.com receives compensation.

*Haven Term is a Term Life Insurance Policy (ICC17DTC) issued by Massachusetts Mutual Life Insurance Company (MassMutual), Springfield, MA 01111 and offered exclusively through Haven Life Insurance Agency, LLC. Not all riders are available in all states. Its Agency license number in California is 0K71922 and in Arkansas, 100139527.

Haven Life Plus (Plus) is the marketing name for the Plus rider which is included as part of the Haven Term policy. The rider is not available in every state and is subject to change at any time. Neither Haven Life nor MassMutual are responsible for the provision of the benefits and services made accessible under the Plus Rider, which are provided by third party vendors (partners).

Photo credit: ©iStock.com/shironosov

Derek Silva, CEPF® Derek Silva is determined to make personal finance accessible to everyone. He writes on a variety of personal finance topics for SmartAsset, serving as a retirement and credit card expert. Derek is a member of the Society for Advancing Business Editing and Writing and a Certified Educator in Personal Finance® (CEPF®). He has a degree from the University of Massachusetts Amherst and has spent time as an English language teacher in the Portuguese autonomous region of the Azores. The message Derek hopes people take away from his writing is, “Don’t forget that money is just a tool to help you reach your goals and live the lifestyle you want.”
Was this content helpful?
Thanks for your input!

Ask Our Retirement Expert

Have a question? Ask our Retirement expert.

Have questions? Email Send your question to jbarnash@smartasset.com