Take a critical look at spending. Think about how your living expenses could or should change. Keep an eye on spending habits in the years leading up to retirement as this will help you more accurately anticipate what your expenses will look like once you are no longer working. Consider if you should temporarily reduce spending on traveling, gifts, restaurants or other discretionary expenses. Sign up for emails from your favorite companies to get notified of deals and discounts. Shop smart at the grocery store and stick to your shopping list. Keep your spending plan updated as this will keep track of all income, the amount going out each month for bills and other expenses and how much financial slack you have available. Don’t forget to account for what expenses might change during your retirement like health or recreational costs.
Consider supplementing monthly income. If your monthly expenditures are still greater than your monthly income, consider supplementing income with part-time work. Do you have a hobby you could turn into a business? What about previous professional experience that could be useful to someone else? Consulting, freelance and contract work is a great way to supplement income on your own terms.
Get a handle on debt. Carrying large amounts of debt into retirement keeps you at the mercy of those payments and reduces the option to scale back spending if it becomes necessary. Focusing on building up your savings now will allow more modifications in your monthly expenses should you need them. Max out your contributions if you can and take advantage of catch-up contributions starting at age 50 which enable you to contribute an additional $6,500 to your 401K and an extra $1,000 to your IRA in 2022.
Account for healthcare. Health-related costs tend to increase as you transition into retirement. Although Medicare will cover a portion of your costs, you will still be responsible for deductibles, copayments and coinsurance. Look into supplemental insurance policies like Medigap or upgraded insurance policies like Medicare Advantage. You can find more information and determine which plan is right for you on the official Medicare website.