Income gap basically is an individual’s monthly or annual budget against their expected income; if ones monthly budget is $ 7,000 and all their monthly income amounts to $ 5,500 then their income gap is $ 1,500 per month. Once there is a gap then several questions have to be answered; should one reduce their expenses and increase their income or a combination of both.
Working an extra year or two may make a huge difference; you continue adding to your net basket. You will still benefit from your employer through health insurance which you would otherwise pay for yourself and pension contributions meaning you will eventually have more to withdraw when you actually retire.
You can always get an extra job, any extra income will boost your finances a big deal, this may reduce the amount you withdraw from your savings thus keep you from taking social security benefits.
Use your house
When you retire you will not need a big house, don’t take a reverse mortgage or take a home equity loan. You can trade down to a smaller house or move to a less expensive area, this may raise you additional money for use towards your living expenses.
Importance of working with financial advisors
It is advisable to work with a professional; a financial advisor will offer you the professional insight you need. The financial advisor will be in a position to evaluate your investments and determine the proper asset allocation for meeting your long-term goals. A financial advisor has the expertise and experience that you may not have, you should consider working closely with a financial advisor to help you make the most informed investment choices for your personal situation.
Wealth management and financial planning programs
One may engage a professional wealth management advisor to aide in financial planning or may decide to use the numerous online software programs; however it is advisable to consider a professional due to the broad experience they have in the field. There are numerous fee based financial advisors who will charge on consultation but are sure to give good advice and recommendations.
Spend less, save more
However little savings you make, it can add up if carried out consistently. You should consider making changes to your spending habits. You may consider reducing discretionary expenses such as lunches and dinners out. You may also transfer balances from high interest credit cards to low or no interest cards and cancel the old ones. This will enable your savings to last longer.
At Lighthouse Financial Planning, our team of financial advisors will provide ongoing in-depth financial planning and asset management services. Working closely with a financial advisor will help you prioritize both your long and short-term financial goals, helping you achieve financial security and better prepare for your retirement.