If you’re close to retirement age or have already bowed out of the working world, you’ll need to keep an eye on your budget to make sure that your quality of life doesn’t drop during your golden years.
If you’ve planned your retirement well by budgeting and saving each month during your working years, you shouldn’t have much trouble keeping to a healthy monthly budget during retirement. Here are some financial tips specifically for retired people that will help you get the most out of your monthly income.
Celebrate your retirement
This may sound like odd advice from a financial point of view, but it’s important for retirees to mark the beginning of their new lives with a special reward for decades of hard work. When you plan your retirement, put aside a special fund for your retirement celebration – this could be a luxury cruise, a new car to use during your retirement years, or a retirement home by the sea.
If you retire in style, you’ll adjust your new lifestyle more easily and be well prepared to budget and spend your money differently than when you were working.
Watch your expenses carefully
During your working years, you might have justified spending a little extra money because you were expecting a bonus or annual increase at the end of the year. Unfortunately, most retired people rely on a fixed income which may only increase enough each year to cover the cost of inflation – this means that your monthly budgeting must be precise.
- To keep your monthly spending in check, you’ll need to draw up a budget which includes every item you spend money on in a typical month.
- You should separate these items into essential items (like food, utility bills, petrol, and medical expenses) and nice-to-haves (like golf club memberships, restaurant dinners, holidays, and the like).
- If you are over-budget this month, pay yourself back by reducing your nice-to-have expenses next month until your budget is balanced.
Don’t stop saving
If you are able to budget your spending during retirement and end up with a monthly surplus, this amount can be re-invested to increase the value of your retirement portfolio or it could be spent on a holiday or other special expenses.
Remember that you can always take on part-time work as a retired person, as long as you are in good health – your years of experience may be highly valuable to many companies or NGOs.