When You Need Cash in Retirement

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Last year’s stock market declines took their toll on many Americans, but retirees or near-retirees were among the most affected. After saving diligently, most people probably believed they could now safely enjoy their post-career years, but market losses that decimated their portfolios put an end to many of those assumptions. If your nest egg took a hit, the New Jersey Society of Certified Public Accountants (NJSCPA) offers some advice on the best ways to stretch your dollar in retirement.

Cut Back to Necessities

If you are experiencing serious financial problems, consider smart spending cuts. Of course, there are many steps that apply to any consumer, including carpooling, skipping takeout or restaurant meals and forgoing vacations for the time being. In addition, many people who are in or approaching retirement have purchased a second home in a dream location. It may be a good idea to consider selling that property or renting it to generate cash. Downsizing to a smaller house will also decrease expenses and could require less time and money for maintenance than a larger residence would. A downsized residence may even be better designed to deal with physical and mobility challenges a retiree might encounter in the future.  Finally, take advantage of the many senior discounts, ranging from transit fares to movie tickets.

Adjust to Your New Situation

Despite the bad news of any financial losses you may have suffered, the good news is that your expenses may drop because of your change in position. For example, your tax position may have improved if your income or assets have declined, so consult with a qualified adviser, such as a CPA, to determine if you should be paying less in taxes. If you have children in college, find out whether your changed circumstances qualify you for greater financial aid or more favorable student loans. By taking such steps, you can cut fixed costs without making drastic lifestyle changes.

Consider the Equity in Your Home

Tapping into your home’s equity can be a great source of cash, especially if you’ve lived in your house for many years and don’t have a large existing mortgage. If you’ve gone into debt because of a financial reversal, a home equity loan will likely carry a lower interest rate than credit card balances and the interest may be tax deductible. Shop around to find a second mortgage or home equity line with the lowest interest rates and fees. But don’t squander your home equity unless you truly need it or plan to use it for a worthwhile purpose. Your CPA can help you determine when using home equity is a smart move.

Branch Out in a New Direction

As the American population gets older, more and more people age 60 and above are staying in the workforce. In fact, by 2016, workers age 65 and over are expected to account for 6.1 percent of the total labor force, up from 3.6 percent in 2006, according to the U.S. Bureau of Labor Statistics. If money is tight, it may be time to join the many Americans of traditional retirement age who continue to work full or part time. It’s a great way to supplement your income, and you might find a new interest or social circle through your new job.

Reconsider Your Money Management Choices

No matter how your current cash crisis occurred, take steps to ensure it doesn’t happen again. Now’s a good time to create a new budget, and research investment options to see if you are on the best financial footing.

Consult Your Local CPA

If you’re unsure about how to proceed, your local CPA can help. Turn to him or her with any financial question facing your family. If you don’t have a CPA, you can easily locate one online using the NJSCPA’s free, online Find-A-CPA service. Just go to www.findacpa.org, and in a few clicks you can locate a highly qualified professional who can assist you.

For more information on various personal financial matters, visit the NJSCPA’s public service website at www.MoneyMattersNJ.com. While visiting, you can subscribe to Your Money Matters, the NJSCPA’s free, monthly email newsletter to receive valuable personal financial planning advice throughout the year

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