Remember The Golden Girls, the TV show about four feisty ladies who came together as Florida roommates after they had experienced divorce and widowhood? Back in the day, I couldn't get enough of Blanche's romantic adventures, Dorothy's no-nonsense manner, Sophia's saucy comebacks and Rose's Minnesota naiveté. Now, I realize that the ’80s sitcom wasn't just a cultural commentary about aging and friendship, but also a blueprint for how to live an affordable retirement.
Retirement is expensive, and sometimes no matter how well you've prepared, you just can't make the numbers work. Who factored a global pandemic into their retirement planning five years ago? How many people imagined they might lose a spouse to it or that they would be laid off from their jobs in the economic uncertainty? And yet, that's not an uncommon scenario.
When working with clients in these kinds of situations, I encourage them to get creative. In those cases, it's still possible to have much of the retirement dreams you had — but with some adjustments.
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Leverage your home
For many retirees, their home is among their biggest financial assets in retirement. Why not use this asset strategically to improve your retirement? For some, that might mean downsizing to something smaller and more affordable or taking out a reverse mortgage.
Or you could be like The Golden Girls and get a roommate or two to help you with the mortgage — and to split up other bills like utilities, cable and Internet connection.
If you're not comfortable having someone in your space all the time, another option is renting out part or all of your home as an Airbnb. Let's say you plan to spend a month visiting family in another part of the country. Rent out your home while you're away. That could help you with a month or two of mortgage and utility payments. If you own a vacation home, think about going in the off-season and renting it out during the prime months to generate more income.
Two of my clients, a couple, bought a vacation home with another couple they were friends with. They each got a few weeks of the year to use the home, and they rented it out the rest of the time. The income they got from the renting helped them pay off the mortgage on that property and save enough for a down payment on another. Now they have a portfolio of five properties, and they use the income from renting to supplement their retirement income.
Power in numbers
Houses aren't the only thing that are more affordable with more people. Consider going in on large purchases with other people.
Take cars. If you live in a walkable community with good public transportation, then maybe you don't need access to a car 24/7. Consider a car-sharing club of neighbors who take turns using the vehicle (and paying for gas, upkeep and car insurance).
Another idea is a Costco or a Sam's Club membership. These stores are a great way to save money, but you have to buy in bulk. Throwing away food that has gone bad is no money saver, no matter how little you paid. Consider getting a few people together to split the membership, then divide up the items you buy.
The same thing goes for meals. I had a client not too long ago who was part of a supper club. There were five people in her group, and they each took turns cooking and delivering meals one day a week to the other four. It was so much more cost-effective to make one big meal than five smaller ones, she discovered.
Get a part-time job
Gone are the days when retirees shut down their computers, said goodbye to their colleagues and walked away from work forever. With longer life-spans, including some type of work in your retirement plan makes good sense.
That doesn't mean you have to keep doing what you've been doing if it's become a drag. Perhaps you can use your skills to start your own consulting business, taking only the assignments you want and working the hours that suit your schedule. For example, a retired teacher could work as a private tutor. A former accountant could do tax preparation for just a handful of clients at tax time. And of course, there's driving for a ride-sharing app like Uber or Lyft.
If you have a hobby you love, consider turning that into a money-making business. Maybe you're a dog lover. If so, sign up with the Rover or Wag apps to board dogs or do drop-in visits when owners are away. Those who are serious about their workouts should consider getting a job at the local gym that might include the use of the facilities along with a paycheck.
There are also volunteer opportunities that may not pay in dollars, but you could earn the experiences you imagined for your retirement. For instance, theater fans can volunteer to usher and get to see performances (albeit probably in the back of the house with an obstructed view). Ski bunnies can volunteer to teach kids to ski in exchange for lift tickets. Golfers can work the pro shop at a golf course and get to hit the links in off-hours.
Make adjustments to your plan
Many of the ideas I've shared for income generation and cost savings might require a certain level of health and physical fitness. These are probably more doable early in retirement. Getting a roommate is great when you're coming and going to see friends and family and participate in hobbies. But later on, you might need to hire a home health aide if your health worsens. You might need that space for your caregiver.
Retirement is a constant work in progress. What works for you now may not be doable in the future, and you'll need to make adjustments as you go. That said, use your healthy, active years as opportunities for cost savings or income generation and shore up your savings for later. Your nest egg will never be bigger than when you first start retirement. By slowing down your burn rate early on, it can continue to grow so you'll have more assets available for big healthcare expenses later.
Even though retirement may be more expensive than you imagined, a little creativity can allow you to afford the things that bring you joy.
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