This is part of an ongoing series about how to trim the budget of the average American. As this series focuses on such broad-based tips, some will work for you and some will not. You’re invited to mention in the comments the tips that you found to be the most useful for inclusion in a comprehensive budget trimming guide at the conclusion of this series.
Pensions, Social Security – $5,027
For the most part, there’s not much the average American can do to alter the amount of money they pay for Social Security and for pensions. For most of us, this is merely a paycheck deduction, something we never see in our take-home pay.
Yet there are several things we can do to increase the value of that money or to secure it. Here are some options that you might want to consider.
Insure your pension. Many corporations have played games with the pensions long-promised to their employees. If this is a concern to you, you can insure your pension so that you’re not at risk of losing it. The Pension Benefit Guaranty Corporation (http://www.pbgc.gov/) can help you get started in this regard.
Know what Social Security benefits you’re entitled to. The Social Security Administration mails this information to most citizens annually. Study this information and know what you’re due to receive so you can plan accordingly. If you don’t have access to this information, check www.socialsecurity.gov.
Know how much money you’ll actually need in retirement. Spend some time utilizing retirement planning tools (I like this tool at MSN Money) so that you know exactly how much money you’ll need in retirement. Use this number to see if you’ll be meeting your needs or not. If not, now’s the time to start socking away more (which we’ll address in another section of this series).
Minimize your requirements. If you’re finding that you’re far short of what you need, you may want to consider minimizing your financial requirements for the future. A big move in another area – like downsizing your home, particularly if it’s overly big now that the kids have moved out – can often create the breathing space you need.
At the same time, improve your self-sustainability. If you have money for it now, invest in things that will make your retirement years much more self-sustaining. Instead of buying a new car, invest in geothermal heating. Instead of redoing the kitchen, look into a small wind turbine. Learn how to garden and to cook. Such assets and skills can drastically reduce your spending.
Develop a “second career.” If you’re still intending to take advantage of your pension as early as you can, consider developing a “second career” that will provide some income while allowing you to engage in something you’re passionate about. There are many jobs and entrepreneurial activities – from tour guide to caterer – that can match exactly what you enjoy while still bringing in some extra income.
Share resources and ideas. Don’t be afraid to talk about your money with people in the same boat as you are. Share ideas with your friends and other people nearing retirement age. Don’t take on your concerns and worries about retirement in isolation – quite often, the people you care about most are facing similar concerns of their own, even if you don’t see it from the outside.
I want your help! In the comments, please let me know which of the tips you find most useful for trimming these costs. I’ll include the top choices in a comprehensive budget trimming guide at the conclusion of the series.