How to avoid Outliving Your Retirement Fund

The CHIP Reverse Mortgage can complement your retirement fund.

The cost of living in Canada has risen by almost 17% since 2007, according to the Statistics Canada Consumer Price Index. Over that same period, many Canadian’s age 65+ income has remained the same.

If your retirement fund struggles to keep up with rising costs, having enough to maintain your lifestyle becomes increasingly difficult. When you first started out looking at how to save for retirement, you probably didn’t imagine that you might outlive your pension fund. Canadians are typically living well beyond 80, this is happening far more often.

Ways to stretch your retirement income

The first step is to set up and maintain a realistic budget. Work out your total household net income per month, including pension, any salary you might still earn, plus any investment income.

Then work out exactly how much you spend each month. Split it into essentials, like mortgage, insurance, utilities, groceries, car and home services. Then look at your non-essential costs like entertainment, dining out and shopping. There are online budgeting templates that can make this process really easy.

After subtracting your expenses from your income, you ideally want to have a nice large positive number. If that number is small or negative, you need to act now to remedy the situation.

Your first move should be to cut down on your non-essential costs. Work out how much you need to trim to make that final figure positive. We’ve come up with some easy ways to help you reduce your monthly costs and balance your budget.

Some tips for saving on non-essentials

Eating out

– do some Internet research on eating out on a budget. Plenty of local media feature top 10 lists of good, cost-effective places to eat out at. Subscribe to online discount services like Groupon, which offer up to 50% off certain restaurants.

Save on movies, books and games

– Inter-library loans mean that there are tens of thousands of books, films and TV shows available to you for free. Some library networks also use the streaming service Hoopla, which allows you to digitally borrow films, TV shows, comics and music.

Consider cutting cable

– switch to online streaming services for shows, movies and sports. Watching network shows on the channel’s website can substantially reduce your monthly bill.

Tips to save on your essentials.

Cut your home phone line

– consider switching to an unlimited talk plan and using your cell phone for all calls. Contact people via Messenger, Facetime or other free, Internet-based, communication methods.

Renegotiate your insurance

– when your home or auto insurance comes up for renewal, call your provider and ask for a better rate. Shop around online or contact a broker to find a better deal.

Cut down on your grocery bill

– sign up to loyalty programs and save up to 10% a week. Use digital flyer apps to create a grocery list and find out which stores offer the best deals on those items. You can also use these apps to considerably reduce your bill at stores that offer price matching.

Another way to boost your retirement income

If, after taking all of these cost-saving steps, the amount at the end of the month is still negative, or too small, there is another way to boost your retirement income.

By taking out a CHIP Reverse Mortgage with HomeEquity Bank, you can cash in on some of the equity in your home (up to 55%). You can then turn this cash into a monthly or quarterly tax-free payment. Use the reverse mortgage calculator to find out what you can get.

This extra cash can help keep you ahead of inflation. The best part is, you don’t have to make any principal or interest payments until you move out or sell your home.

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