Retirement should be a celebration of the end of a long working life, giving you the chance to move on to new adventures. However, if you are looking at rising costs and feel concerned about how you will pay your bills, retirement on a tight budget might seem like a huge challenge.
The truth is that when you retire, you should always take the time to reflect on your finances – this is one of the most important areas to consider in the run-up to retirement. With some simple tips, it isn’t so difficult to live a happy and healthy retirement on a tight budget!
Avoid retiring too early
In some organizations, it may be normal to take early retirement. Who wants to wait any longer than necessary to kick back and relax? However, leaping into early retirement – or even retiring as soon as you can once you are the usual age – can be a mistake. Taking retirement too early can mean you don’t receive your state pension when you need it and have to wait, which can have a negative impact on your finances.
Consider your home before retirement on a budget
Are you living in a big family home and notice that your utility bills are climbing ever higher? Your finances can suffer due to the size of your home, even with a fully paid off mortgage. Retirement can be the ideal time to trade in a large home for somewhere smaller.
This is a great choice not just for financial reasons, but to reduce the stress and strain of maintaining a big home. Spending all your time looking after your property can have an impact on your physical health, and planning for a future where you may not be as physically able to do so or to get up and down stairs can be a good idea.
Refine budgeting skills
Even if you have fantastic budgeting skills, retirement budgeting is quite different. You won’t have the same amount of income, and if your outgoings remain the same, this could tighten your financial situation even further. Take the time to think about how you want to plan and view your budget, and write down all of your outgoings – even subscription services and similar. This can help you to cut costs where you don’t need to spend and have a little more left over for activities you really want to do.
Plan for seasons
Your finances and health can change drastically throughout the year. For example, your heating and electricity bills are likely to rise in the winter and drop in the summer, and you may find that you catch seasonal illnesses, too. Plan for these times by setting aside any savings you do make during warmer seasons so that you have a more balanced income throughout the year.
This kind of seasonal planning can be especially important if you are supplementing your income with a part-time job, or enjoying socializing with volunteer work or classes. If you are unwell or can’t get out in bad weather, you may not be able to attend work or activities, and planning ahead for this can ensure your mental health doesn’t suffer.
Stay active without spending, critical to retirement on a budget
Not everything has to be about maintaining a budget and watching the pennies. Retirement should be about enjoyment, and the best way to enjoy your time is to stay active where possible. Taking up a low-cost hobby like gardening can be good for your body and mind, and days out or holidays can be enjoyed by taking advantage of discounts or sharing the cost with friends and family. You can still discover new and exciting activities and places with a little forethought, without worrying about money at all.
Whenever you choose to retire, keep in mind that there is so much more to consider in this phase of your life than endless holidays and coffee shop catch ups with friends. Becoming budget savvy and making a few changes can help you to live out a fantastic retirement without needing a huge income. After all, the truly special parts of retirement, such as enjoying your favorite hobbies, experiencing less daily stress, and spending more time with loved ones, don’t have a price tag.
You can find additional helpful information about retirement and downsizing at the National Council On Aging.
Author bio: Kevin Still
Since graduating from university in London, I have been working as a digital consultant. I enjoy advocating for content around financial health to help all different groups of people achieve their goals.