Budgeting and Retirement: Tips on How to Live off Your Fixed Income
If you’re like many hard-working people, it’s probably your dream to quit your job, retire, and spend the rest of your days doing what you truly enjoy. While you may like to daydream, it’s easy to forget you’ll need enough money to get through the 10 to 30-plus years of retirement.
The good news is that if you’re approaching retirement age, you can still try to save a few more bucks. If you’re already retired now, you can save money over the long term by creating a budget and cutting down on your expenses. Here’s a roadmap to follow to truly enjoy your elder years without worrying about running out of cash.
Investing for Retirement
As you approach retirement, you must look at your bank account and investments and seriously think about whether you are close to your financial target. The general rule is that you should have 10 times the annual income at your job ready in the bank when you retire. So, if you’ve made $50,000 for many years, you will want to have at least $500,000 in your account. If you don’t, you still have time, but you really need to get to work.
Late-starters for retirement need to find ways to save money and boost their retirement savings. Sell items you no longer need, rent your home if you can, and work a side gig like driving for a restaurant. With your money saved, speak to a financial advisor. They can make sense of your savings and create a plan to help you continue boosting your money.
You can also save for retirement by contributing to a 401(k) account at your job. On average, those who are approaching retirement between the ages of 55 and 64 have around $256,000 in their 401(k) account. If you’re far away from that, it’s wise to talk to your employer and increase your contributions so you can be more prepared when the time comes. If you don’t yet have enough in your account, you should second-guess retirement at this point. Keep in mind if you wait longer, you may earn more per year. However, that’s a decision you need to make after weighing the pros and cons.
Create a Budget
Once you’re officially retired, you must take care of your money and consider every financial decision you make. You may be excited about relaxing every day, but if you spend money willy-nilly, you could still quickly run out. You simply don’t know what can happen during these years. You could have a medical scare, you might have to move into an assisted care facility at some point, and there could be unforeseen economic factors, like inflation. Solve this and many other problems by creating a budget.
Sit down with your loved ones and look at every source of income you have each month, from Social Security, bank accounts, side gigs, and any other sources. Then, closely examine your expenses, from big purchases like mortgage and insurance payments to the small, minute costs of going for coffee, eating lunch at the golf club, and paying for gas for the car. Now, you need to add everything up and compare. If you don’t have enough money to cover your expenses, or it’s incredibly close, you need to make some changes.
There are many ways to eliminate those often-forgotten expenses, like brewing your coffee at home or buying lunch at the grocery store and eating before you head to the golf game. You can also take advantage of perks specifically for older adults, like discounts at restaurants and retailers. Consider joining organizations like the AARP, which can help you with discounts on eyeglasses and fuel costs. If you love to watch movies at home, rent them at the library instead of buying them at the store.
Modify Your Home and Possessions
You can also save money and live on a fixed income during retirement by downsizing your home and selling the possessions you no longer need. Do you still need that huge house? Is it paid off? If so, consider selling and moving into a smaller condo or apartment to save money from the home sale and cut your monthly utility expenses in half. Avoid buying a new home because you’ll be met with many surprise costs, like closing and homeowners’ association fees.
Even if you want to stay put, look around your home at items you no longer want or use. If you haven’t used your iron, read those books, or worn that coat in your closet, consider selling it all. In addition to making some cash, when you have fewer possessions, you can also spend less time cleaning and dusting what you have and more time enjoying yourself.
You may be like many retirees who not only decide to stay in their homes but also look for ways to renovate them and make them more enjoyable for their golden years. If so, then renovate on a budget. Before you hire a contractor, read online reviews from past customers to see if they overcharge. You should also ask for an estimate and get the cost in writing. Finally, consider renovating during the off-season, which is typically the colder months. Most contractors have less work during this time, so they may give you a better price so they can pay their own bills.
Yes, your retirement years can be fantastic if you start planning early and continue your strategy as you age. Consider the tips discussed here, and you’ll live long and prosperous while enjoying what you love most.
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