OK, so you are among the many who can’t pull off saving $1 million, or 5 times your annual salary, or whatever the current amount is that’s supposed to provide you with a comfortable lifestyle once you stop working.
What should you do about it besides fret? Instead of trying the unrealistic path of saving a mountain of money at the last minute, try bringing the mountain to you: Adjust your expectations of what your retirement will look like if you have less to spend than you thought you needed. It’s not all bad.
Here are a few ideas for living on less in retirement:
1. Move to Expatria, the largest country you’ve never heard of.
Expatria, as the “nation” of expats is known, is flourishing, thanks in part to U.S. retirees looking for places to live for less and still scratch that itch for adventure. There are plenty of parts of the world where the cost of living is less than in the United States and where U.S. citizens in their retirement are welcome. As a general rule, other countries are quite happy to have you come and spend your money there ― just not to come and work, taking jobs away from their own citizens. They are also less keen on paying for your health care, even when they have a universal plan. Yes, Canada, we are talking about you.
About 500,000 American retirees are now living abroad, according to the Social Security Administration, which delivers checks to them around the globe each month. One heads-up if you want to join their ranks: Check the rules of the country where you want to settle to see what the local tax liabilities will be on your income ― including Social Security.
While Social Security has you covered (with a few exceptions) anywhere in the world, Medicare benefits come to a screeching halt at the U.S. border. This means as a retiree living abroad, you’ll either need to re-enter the United States to have your medical care covered by Medicare, or pay for care yourself.
One of the more popular places for retired Americans to live is Costa Rica, which has a thriving expat community of more than 20,000 U.S. citizens. A retiree can live there for about $1,300 to $1,600 per month, according to SmartAsset. Oh, and it’s gorgeous, and they have universal health care for citizens and permanent residents.
The publication Live and Invest Overseas picked Algarve, Portugal, as the best spot to retire overseas in 2017, based on a combination of natural beauty, weather and affordable housing. The publication estimates a retired American couple could live comfortably there for about $2,160 a month, including pool maintenance.
International Living is a great site to begin an investigation into what it’s like to live in Expatria. (For starters, you will likely have plenty of company: InterNations estimates that 20 percent of all U.S. expats are retirees.) AARP also offers a list of the best places to retire abroad.
2. Work part-time.
Social Security, which was signed into law in 1935, was intended to provide a financial safety net for lower-income workers when they retired. It helps if we all keep that in mind, because it isn’t ― and never was ― intended to meet anyone’s full retirement needs. Still, the SSA estimates that 21 percent of couples and 43 percent of single seniors count on Social Security for 90 percent or more of their total income. Other sources of income include any pensions you can collect ― increasingly rare ― and drawing income from what you have managed to save.
However, you won’t be alone if you consider taking on a part-time job in retirement.
The rule of thumb for retirement savings is that you need to have saved $240,000 for every $1,000 you expect to need per month in retirement. So if you haven’t saved that much, one alternative is to replace that income through a part-time job. Remember, $1,000 a month is roughly just $250 a week. Heck, some teenagers make that much babysitting in the summer. (The current baby-sitting rate is about $15 an hour. Here is a calculator to see what you could earn in your ZIP code.)
3. Consider home-sharing.
While paying for health care may be a retiree’s boogeyman, don’t dismiss housing expenses as a walk in the park. They are very much a budget-crippler.
But remember what the Golden Girls did? Sharing a home with like-minded friends not only reduces housing expenses, but also provides a built-in support network.
Or if you love your friends but living with them just isn’t your thing, rent out an unused bedroom to someone and enjoy the extra monthly income. Think broadly: Can you turn the garage into a studio apartment and collect a monthly income from it? How about moving into a granny shack in the yard and renting out your home for even more money?
You can also use your home to reduce your spending. Consider trading some space for live-in help. Giving up an unused bedroom for someone who will do light housekeeping, cut the grass and drive you where you need to go beats paying for those services.
4. Unload your car.
When you eliminate your commute to work, there’s a good chance you will be eliminating one of the primary reasons you even had a car. You’ll certainly be driving less. Figure out what it costs you to own and operate a car for a year ― purchase or lease price, insurance, gas, oil changes, tires, repairs and parking ― and divide that by 12.
Owning and operating a personal vehicle in 2017 cost an average of $8,469 annually, or $706 each month, according to AAA. Depending on where you live, it may cost less to call an Uber or take public transportation to get around. You can always rent a car when you need it.
Plus, your heart will thank you for walking places or getting around with a bicycle.
5. Embrace the sharing economy.
Swap homes with someone who lives where you want to vacation. Form a neighborhood co-op for Costco memberships and buy in bulk. When you travel, stay in Airbnbs, which tend to be less expensive and often have small kitchens in which you can make your breakfast to save even more money.
Sign up to be a home- or pet-sitter with a service like Trusted House Sitters. For $119 a year, this service finds and vets pet-sitters who want to vacation by staying in someone else’s home. You can become a pet-sitter yourself, or use one to save money on a pet-sitter while you’re away from home.
6. Rethink travel.
The beauty of not being tied to a work schedule is that you are free to move about the cabin, so to speak. Travel gets a whole lot less expensive once you aren’t wedded to peak travel times. Travel off-season and fly midweek when the fare is lower. Spend weekends in hotels that cater to weekday business clients.
You can also stay longer and get to live more like a native than a tourist. Think about renting out a whole apartment or house and using it as your base. Access to a kitchen means fewer meals out.
7. Downsize and declutter.
There really is gold in “them thar hills” ― and probably in your attic, basement and the storage unit you pay for each month.