The recession was a blow to everyone. Its effects were felt worldwide but within the USA for example one age group became particularly vulnerable; those in middle age and older who saw their assets diminish at a time when they needed growth toward retirement, and of course those who had already retired and could ill afford seeing their assets reduced.
The stock market was of little help, nor was the real estate market with a surfeit of choice and little demand. It brings home the realities of financial security; the need to have an emergency realistic loans as well as proper provision for retirement. There is widespread concern that the Social Security System is going to find it increasingly difficult to maintain current benefit levels. People are living longer with fewer works contributing to the Fund and opposition to increasing taxes to boost that Fund.
It is logical therefore for individuals to look at their situation to see if they can increase their income, and savings, while reducing their expenditure. It requires self-discipline, determination and common sense but not necessarily major sacrifice. It is worth cutting down on meals out when there can be real satisfaction from cooking at home. Likewise meeting for coffee need not take place in somewhere like Starbucks; it can be in the back garden because there are plenty of good coffees available at the weekly shop.
Some expenditure does reduce as people get older says a study by the Employee Benefit Research Institute but of course in retirement, so does income, especially in retirement.
Maintaining a large family home is not cheap. Why not reduce the size of your property if you have no need of all the rooms? You will certainly save money. As much as 40-45% of income can go on the home, including utility bills, insurance and general maintenance. There are people reluctant to leave a familiar neighborhood but often it make sound financial sense. Selling up and downsizing can put money in the bank. Drawing value from real estate yet staying in the property is another alternative but professional financial advice should be sought before taking that route.
Bills are likely to increase with age. There are a plethora of insurance policies for medical, dental and long term care provision that you should research. Problems can arise unexpectedly and it is best to be prepared as far as it is possible.
This will be directly related to income. Your annual bill may well reduce but often only because your income has as well.
It is certainly a luxury for a couple to run two automobiles and they should ask themselves whether it is really necessary if money is tight, no matter how many years they have done so. Travel in general needs to be considered and decisions should be based upon realistic needs and affordability.
Debt Is an Obstacle
The most obvious obstacle to comfortable retirement is insufficient income. It is important that no one carries unmanageable debt in middle age and beyond. The credit card has been something, apparently innocent and convenient, that has caused major problems, and current national statistics suggest that it still does. At the end of every month a high level of interest is applied to balances. Anyone only able to pay the minimum the card companies requires each month will find the balance will hardly drop. No one should carry such debt into retirement. The answer is to take out a personal loan that will pay off such balances while the card holder has the regular income to do so. The interest rate applied will be much lower even for those with a poor credit score.
Online lenders will look at affordability rather than credit history in determining whether to approve an application or not. If this is an escape route, and there are many reasons to suggest it is a very good one, the main thing to then remember are the four words used earlier in the article; self-discipline, determination and common sense, so there is no return to spending that is not affordable.