Entering into retirement is an exciting time and a chapter of life which comes with its unique share of challenges. One of the biggest challenges is adjusting to a fixed income.
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Retirees will need to make careful money moves to ensure they are spending their limited inflows of funds wisely and not on purchases that can hike up expenses. Here are some helpful ways on cutting costs in retirement.
Create a Spending Plan
It’s difficult to begin cutting costs if you’re not sure what’s specifically driving up expenses. In addition to figuring out your monthly expenses with the help of a budget, creating a spending plan can help retirees track current expenditures.
A spending plan allows retirees to review expenses line-by-line. This helps determine which expenses will increase during retirement, like travel, or decrease, like work-related expenses. Once you create a spending plan, use the next few months to track and see if your actual spending matches the outline. Retirees who see a big difference in expenses which increase or decrease may update their expense sheets accordingly.
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Keep an Eye Out For Spending Leaks
Spending leaks are quite common in retirement. This is where a retiree may be overspending, such as giving gifts to family members or even organizations like an alma mater university.
Retirees need to be careful about uncovering their spending leaks. Once they discover where there are leaks, they may identify where budget plugs are needed and better determine which items to prioritize in a retirement budget. For example, retirees who financially support children or other organizations may need to have a conversation together about changes in gift giving. This allows them to better establish boundaries with family, friends and organizations.
Reassess Your Living Situation
One of the biggest benefits of retirement is the ability to experience more flexibility in where you live. If you lived in a major city to ensure closer proximity to your workplace but no longer need to worry about commutes since you’ve entered retirement, now is a great time to reassess your living situation.
Can you downsize your current home and move to a smaller space, like a condo or duplex? What about moving to a lower cost of living area, like another city in the same state? Or, have you considered moving out of state? In reassessing your living situation, you may find you can cut costs quickly by selling your home or even utilizing house hacking such as renting out spare rooms or spaces in your house which are no longer in use.
Work a Part-Time Job
In addition to cutting costs, such as downsizing your home or getting rid of excessive monthly expenses which no longer financially benefit your household, retirees may consider finding and working a part-time job. If not a part-time job, explore side hustle options. For example, a retiree may decide to freelance as a consultant. This allows them to set flexible hours, work with clients they’re passionate about and utilize their years of experience within a given industry.
Part-time work is also beneficial for retirees in allowing them to explore a job they enjoy and increase their retirement savings at the same time. This helps ensure you are dipping into savings less and allows you to grow your overall income.
Utilize Senior Discounts
Now is the time to reveal your age so you can receive senior discounts.
Retirees, and individuals who turn 50, are eligible to sign up for an AARP membership. This gives seniors, and retirees, access to member discounts, products and services. You may be able to apply specific discounts to groceries, meal delivery services and online gift retailers. Not sure if a senior discount is available? Ask the establishment you’re at to find out and enjoy the extra savings which come from being in your prime years.
Meet With a Financial Advisor
Retirees who are still uncertain about the best ways to cut costs in retirement may consider seeking out advice from a trusted financial advisor. A financial advisor or planner will be able to review your financial plan with you and offer another set of eyes to determine if there are any costs you might not have noticed where you can tighten up.
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