It used to be that the golden years were a little moregolden. In addition to social security benefits, you’d retire with a pension,and you could live off the interest earned on retirement savings. Add a lowercost of living and higher home equity to the equation, and living the good lifewas easy. Nowadays, retiring mostly means living on a fixed income.
What does this mean if you’re approaching retirement oralready living on a fixed income? The good news is that the frugal can and dorule retirement. While the years may not be as golden as you’d like, they canbe lined with silver, if you keep these tips in mind.
Live below your means
This maxim has never been more important than right now. Ifyou’ve been saving up for retirement since your college years and can afford toparty it up in the Caribbean well through retirement, more power to you. Ifnot, get real. Living on 20-25 % less than your income enables you to savemoney for the unexpected, be it a medical problem that requires out-of-pocketexpenses or a present for a surprise birthday party. One idea for if you livein a city or a place with public transportation, live the car-free life.
Micromanage your budget
Living below your means on a fixed income leaves very littlewiggle room when it comes to budgeting. Prioritize your expenses, starting withset costs such as insurance, healthcare, rent or mortgage, and utilities. Thenadd the average amount you spend on discretionary expenses each month, such asentertainment, food, and gas. If your total expenses aren’t 20-25% below yourmonthly income, cut from your discretionary costs until you have enough moneyearmarked for savings.
Avoid adding new debt
Now is not the time to add more expenses and debt. If you’vehad trouble in the past with bad financial decisions and impulse buying, steerclear of triggers that might lead to overspending. A shiny new purchase mayseem like a good idea at the time, but busting your budget can have a lastingimpact that is likely to lower your standard of living substantially. Practicecontrolled splurging instead. Occasionally earmark some of your discretionaryincome and go shopping.
Consider moving for tax savings
Because your income is most likely lower than it was beforeretirement, you should pay less in taxes. If you’re looking for additional taxsavings, it’s good to know that some states are more retirement friendly thanothers when it comes to social security benefits and income and sales taxes.There are currently nine states that don’t charge income tax, another 37 thatdon’t tax Social Security benefits, and there are four states—Alaska, NewHampshire, Oregon, and Montana—that impose no sales tax.
Downsize to a smaller place
If you’re still living in the family home, now may be theright time to sell and move into a smaller, less expensive place. Doing sooften gives you money to invest and save, and a smaller home will cost less torun. By selling, you may also lower your property taxes or have to pay none at all,if you choose to rent.
Have fun for free
It’s ironic that when you finally have time to pursuehobbies and interests, your income is limited. It is possible, though, to enjoyyourself by spending little to no money at all. If you’re eligible, take advantageof senior specials, and check local publications and websites for free events.Museums, zoos, and botanical gardens often have complimentary admission daysjust for you.
Also, consider volunteering. Many organizations will rewardyou with free passes to events when you donate your time. And take advantage ofonline communities like meet-up that unite people with similar interests.
Earn extra money on the side
We know, retirement is a time to not do anything but relaxand live well. “I don’t have to, I don’t want to, you can’t make me,” is agreat attitude if you can afford it, but not so much if you’re really pinchingpennies. Retirement is a new stage in life, so treat your career that way tooby picking up a few side hustles now and then for extra income.
Living on a fixed income does take some adjustment, but withsome creative budgeting, you can enjoy a satisfying retirement.
By David Lasman – “Ask Medicare Dave” | President – SeniorHealthcare Team
wwww.SeniorHealthcareTeam.com | 866-333-7340
Selecting the right healthcare plan through Medicare can beoverwhelming and downright stressful. Senior Healthcare Team is a nationwideresource that provides guidance and support about Medicare to seniors at nocost to them and helps them to choose the most suitable insurance plan tailoredto their specific needs and budget. Ourgoal is to educate and empower our clients to make the best decisions regardingtheir healthcare and clear up the confusion of Medicare. At Senior Healthcare Team, we aren’t partialto any one insurance company. Ourloyalty is to our clients and our mission is to provide them with the besthealthcare options at the very lowest cost.
