One of the last things you want to be concerned about when you finish working is the amount of money you have. There are so many other more important things to enjoy in life, especially once you are in retirement. However, in order to avoid burdening yourself with concerns over money it is wise to think about what you can do to reduce the amount of money you are spending. It is almost inevitable that retirement will mean living on a smaller income compared to when you were working. This need become as much of a problem as it perhaps first appears….and here is why…
Your mortgage should be paid off
Hopefully if you bought your house early enough your mortgage should be paid off by the time you reach retirement age. This should drastically reduce the amount of money you need to spend as a mortgage is on most occasions the biggest monthly outgoing for any household. Looking at this chart from Project America, the average US family spends 30% of their income on housing. Once this cost is removed, you should be substantially better off each month.
Your outgoings should fall naturally
Working, travelling to work and being out of the house each weekday normally means certain costs will pile up each month. These can include…
- Paying for Gas/Petrol
- Car maintenance
- Buying lunch
- Toll fees
- Socialising after work
…to name but a few. Hopefully these costs can be reduced once you are retired. You may also want to consider getting rid of one or more car (s) if you no longer require them.
You can start to make savings
Being retired you will have more free time available. You can put this advantage to good use by making savings. How can this be done you might ask? Well often people pay a premium to use services and consume goods during times that are convenient. For example booking a vacation outside of the school holidays is cheaper as demand is lower. Restaurants often offer deals midweek which when you’re working may not always be practical. On top of this, just by having more time on your hands will assist you in making savings. An example of this is that you will be able to collect and organise money saving coupons for use with everyday purchases.
You can always supplement your pension
Whether you are receiving an employer’s pension or you bought an annuity, your income can always be supplemented by additional part time work if necessary. One note of advice on annuities, make sure you compare providers using sites such as 123annuityrates.co.uk before you buy one as not comparing rates can be a lower income.
If you try all of the above and still find you have less money than you need, you can always supplement your income with a home-based business. Typical ideas for a business in retirement include being a handyman, gardening, car washing, dog walking and babysitting. All of these can be started with minimal amount of money; in some cases there are no start up costs at all.