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Five Ways to Retire With Less Money

by Kevin on February 14, 2013

What if you are one of the many millions of people who have little chance of having a million dollar retirement portfolio by the time you reach 65? Should you abandon the idea of retirement completely and plan on working until you die?

Hardly.

The reality is that most people will enter retirement with something much less than $1 million. The ability to retire is often more dependent upon factors beyond your retirement portfolio.

Here are some ways to enable you to eventually have some form of retirement, even if you will never amass a retirement fortune.

Cut your living expenses

A major reason why retirement portfolios need to be so large today is the high standards of living we’ve all become accustomed to. You can cut down on the amount of money that you’ll need in retirement by cutting back on your living expenses now.

This will accomplish two positive goals. First, it will free up more money now so that you can invest it either in your retirement portfolio or in other income producing ventures. You can also use it to payoff debt.

Second, if you begin living on less money now, you’ll already be conditioned to live on less when you reach retirement. You may find that you don’t need a $100,000 income in retirement, and you can actually get by quite nicely on $30,000. If that’s the case, you won’t need such a large retirement portfolio.

Cutting your living expenses can include living in a less expensive home, driving a less expensive car, and spending less on everything that you buy. You can also learn to enjoy free and low cost activities, rather than so much of the gold plated entertainment we all take advantage of today. Contentment–not entertainment–should be the goal.

Get out of debt

This is growing problem for today’s retirees. Accustomed to a lifetime of debt, people in retirement have credit card bills, car loans and even large mortgage balances. All of these debts will increase the amount of retirement income needed, and also the size of the retirement portfolio that you will need to provide that income.


Just by paying off any debts that you have, you’ll need less income in retirement than most people do. In addition, the cash flow gain from paying off debt is usually much greater than the income you will receive on a comparable amount of money invested.

Plan to semi-retire

There’s nothing to say that you have to completely retire and stop working when you reach a certain age. You can choose to continue working, but cut back on your work. Social Security income and at least some return on your retirement portfolio, and the income from a part-time job or business may provide all the income that you need. Finding some kind of work that you don’t feel the need to escape from may be the key.

Create passive income sources

You can also create income streams that are unrelated to employment or to your retirement portfolio. A small income producing rental property is one way to do this. By buying early in life, you’ll have time to payoff the mortgage (with the tenant‘s money), and provide a large share the rental income as an additional source cash flow in retirement.

Delay your retirement

If all else fails you can also delay retirement. This will help you on two fronts. By delaying retirement you’ll give yourself more time to accumulate additional retirement savings and other income sources. But it will also cut back on the number of years that you will need to draw down retirement assets.

It also helps Social Security income. Social Security benefits increase if you delay your retirement past was is considered normal retirement age, up to age 70. You can increase your Social Security benefits as much is 32% by delaying your retirement from age 66 to age 70.

Retirement isn’t a hopeless situation just because you won’t be a millionaire retiree. You just have to get a bit creative and look in other directions for ways to provide for yourself. And that shouldn’t be too difficult considering that you’ve already been doing that all your life.

Will you have a million dollar retirement portfolio? If not, what other plans are you making?

{ 5 comments… read them below or add one }

Michelle February 14, 2013

These are all great ways to retire with less money. We are working on passive income and paying off debt!

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Kevin February 14, 2013

Hi Michelle–Maybe you can connect the passive income sources to pay off debt. That’ll kill off two birds with one stone. Then the debt will be gone, and the passive income will still be there for retirement. That’s a double win!

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Michelle T February 15, 2013

So many things I read in Christian columns about retirement leave out “God’s Economy”. Neither of my grandmothers had any kind of retirement plan that I know of and they seemed to do just fine because God took care of them through different ways. Not a bad idea for people to consider the possibility of having an independent place at their grown children’s homes. My parents have had a garage apt. at my house for 10 years. They pay a tiny bit for utilities with no worry about upkeep etc. I like having them “just outside” so I can keep an eye on them as they get older for health and safety reasons.

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Kevin February 15, 2013

Hi Michelle–You’re so right! I truly believe that God will make a way for each of us even if we’re unprepared. But I don’t think that’s a reason to do nothing either.

As to living with children, that’s tough to count on even if you are a Christian. Christians are largely following the general secular patterns in too many ways, one of which being a fierce emphasis on “independent living”. It’s closely guarded.

A couple of generations ago that was a common arrangement but not anymore. Even if your child agreed to it, maybe their spouse wouldn’t.

But yes, God can work around that too. I haven’t known any elderly ending up in poverty even if they were flat broke by age 65.

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Violet March 4, 2013

Thanks for the wise tips! Quite often people think that it’s too early to prepare for retirement and think that they have much time for that. I’m sure that it’s not worth to think like that and do your best to save enough money. But it’s life and there can be different circumtances so these ways to help to retire with less money. First of all, it’s necessary to live within your means. There are things we think we really need but we can easily live without it. So take a look at your budget to see the real picture. If you feel good I think that it’s possible to proceed working and making money to provide yourself. But we should try to do our best to save enough money not to live through loans no credit check and borrowing cash.

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