Making Your Dollar Go Further During Retirement
For many, retirement is a time to enjoy life at a slower pace. However, it can also be a time of uncertainty, as you transition from having a salary with regular increases to relying on a fixed-income or fluctuating retirement funds. The greatest concern for many is the possibility of running out of funds. Considering the astronomical prices of healthcare, growing inflation, and the state of the world economy, the concern is valid.
This brings up a common question among retirees: How can I balance my desire for freedom with the ability to stay afloat during these economic conditions?
Develop a Plan
The first step is to create a well-thought-out, strategic financial plan. Developing a financial plan and reducing overall spending can offer stability and ease concerns. Minimal adjustments in a few lifestyle choices can have a major impact on your financial wellness in your golden years. The detailed plan should include:
- Overall net worth
- A monthly budget
The net worth portion of the statement should include an extensive analysis of all assets, debt owed, and any cash you have on hand. For the income and expense portion, be sure to calculate all streams of income using the Retirement Income Estimator in addition to all outgoing expenses. The sale of large assets could also be included in this section. Once your statements have been completed, you can develop your monthly budget. Having a budget gives you clear guidelines to follow and accountability for determining if you are on track to meeting your financial goals.
The Little Things Matter
When evaluating your lifestyle, it is not practical to cut out everything you enjoy. Small lifestyle changes can ease the effects that downturns in the economy have on your bank account. A few minor changes can make your dollars go further:
- Decrease your monthly grocery expenses. By planning out your meals each week and taking inventory of what you already have in your kitchen prior to heading to the store, you can effectively avoid spending money on unnecessary groceries. You can also save money by using coupons and purchasing store brands.
- Reduce your energy costs. Take shorter showers, checking insulation, and replacing incandescent light bulbs with LED bulbs.
- Cancel subscriptions and memberships that aren’t in use. It is easy to sign up for automatic billing subscriptions and then forget about them. Although $5 may not seem like much, multiple $5 memberships will quickly add up.
- Lower monthly car insurance & phone bills. These monthly costs are often ignored when evaluating your expenses. You can cut fees by price shopping among service providers and canceling any unnecessary warranties or coverages.
- Cut back on dining out. Plan out meals each week and prepare them ahead of time. This can make eating at home just as convenient while costing significantly less. Additionally, cutting back on how much you dine out could benefit your health.
- Revaluate your form of transportation. Owning a vehicle that has a high monthly payment or high fuel and maintenance costs is one of the largest financial burdens for many retirees. It’s a good idea to consider acquiring a vehicle that has little to no monthly payment, good fuel efficiency, and overall, less expensive to maintain.
Making these small changes may seem to have little effect on your overall financial stability, but they will begin to add up over time. Being intentional with managing your finances effectively during retirement will yield you the fantastic benefits of being able to balance your desire for freedom with the ability to stay afloat during these volatile economic conditions.