You’ve finally decided to retire. After a lifetime of work, there is no sweeter reward than knowing that you can finally say goodbye to early mornings and long days at the office and start living a more laid-back lifestyle.
While retirement looks different for everyone, one thing is almost always the same. Retirement comes with a sense of uneasiness about money. Even if you are completely prepared to start living on a fixed income, many people still question how to save money after you’ve retired.
Even if money is tighter than it was when you were working, saving money and living well in retirement is not only achievable, it is easy if you put a few core practices in place prior to retiring. Having a plan is the best way to start saving. To start that plan off on the right foot, it is in your best interest to devise the plan when you start thinking about your retirement, so you have time to put it in place and set yourself up for success.
Here are three ways to save money after you’ve retired:
1. Review Your Insurance Policy for Changes
Something not often thought about when retiring is to review your insurance policy for changes. Most people don’t realize that home and auto insurance needs change as you get older. There are a few factors that play into this.
Did you pay off your mortgage? When you take home-owners insurance, you must take enough to cover the cost of your home if anything were to happen to it. For most people, that was more than 30 years ago, so the appraisal to your home may have changed. It is also a good idea to look into savings that you may not have thought of, like adding a security system, that could reduce your premium.
This is a great time to also ask your agent about possible discounts that are available to seniors. Some companies offer discounts for going so many years without a claim as well. Knowing your options can help you save money, and your insurance agent should be able to walk you through any discounts or options that are available to you.
The same goes for cars. If your car is older and paid off, it may not benefit you to carry full coverage anymore, as your premium costs outweigh the cost of your car in an accident.
2. You Need a Budget
If you do nothing else financially when heading into retirement, you need to budget. Budget, budget, budget. If you weren’t a budgeter before considering retiring, it is a good idea to start and stick to your budget before actually taking the leap into retirement. This is helpful because you are learning to live on less, which also means you are padding your savings, and you are getting used to seeing where your money goes every month.
This is especially important if you are an impulse shopper, or you like to do things like dine out frequently. Both of these things may have been no big deal when you were bringing home your salary, but when you head into the land of the fixed income, you may find you need to reel it in a little more. Or maybe you don’t, and you can continue the exact same lifestyle.
Setting aside a clear amount of money for each area of your lifestyle can help you see what is really important and where you can cut things out. It can also open your eyes to payments you may not even have realized you were incurring, like subscriptions to services you don’t need. It’s a great way to give yourself a financial checkup and let you make the adjustments necessary before retirement.
3. Pay Off Debt
One thing that can significantly help you save money in retirement is to pay off as much debt as you can before you head into retirement. This will free up more money in your budget monthly and it will also give you peace of mind that you don’t have to worry about payments.
Paying off your mortgage, car, or any large payment every month means you can use your monthly income more freely to do the things you really want to do. Maybe for you that is traveling, spoiling your family, shopping, or just enjoying a life free of payments. In any case, taking away that stressor will help you live a more peaceful life.
Retirement is an exciting time, but it can also be met with some nervousness. Anytime you start something new there is always the fear of the unknown. With some preparation beforehand, you can head into retirement ready to enjoy the rest of your life and not having to worry about your financial future.