Your retirement is finally the time to relax and enjoy life. But it shouldn’t be an invitation to be reckless with your money. If you want to enjoy your retirement, you need to ensure you are financially secure and stable. What are the things that could help you maintain financial security when you don’t have a salary to rely on?
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Know your retirement figures
The first thing to do is to understand what kind of income you will have in retirement. In our previous posts, we’ve looked at different types of pensions and how to calculate your pension. We’ve also explained the ins and out of your state pension. These are worth reading if you’re unsure how much money you’ll have coming in once you retire.
If you are still working, you can use the opportunity to think about when you want to retire. You could find out that working for a few years longer could considerably boost your income. If you’ve already retired and you want to improve your financial situation, then knowing what your exact pension income will be will help. It allows you to create a better budget to follow.
Set a budget
When it comes to financial security, having a budget helps. A budget allows you to live within your means and prepare a safety net for the unexpected. There is a lot of useful budgeting tips to be found online. Getting started is not difficult. The main things to know are:
- How much money you have coming in
- How much you’re spending
- What kind of savings you have, if any
You should set a realistic budget to cover your monthly expenses and have some money left over. If you still have a lot of debt, make it a priority to pay it off as soon as possible. Check out these budgeting apps that can help you with budgeting.
Find ways to save and cut spending
Many people save for retirement, but it’d be a mistake to stop saving once you retire. You don’t want to keep dipping into your savings without maintaining a safety buffer. Unexpected events can happen, and you want to have access to money without taking a significant loan. When creating a budget, make sure to transfer some of your income to a savings account each month.
Saving is not the easiest in retirement. You might find your retirement income falling from your working income. The good news is that there are different ways to save and cut spending. If you want to maintain your financial security, then you might want to consider things like:
- Downsizing - Consider moving to a smaller home to cut costs. A smaller home might be easier to maintain and care for as well. You could even think about relocating closer to shops and services and get rid of your car. Downsizing is not just about your home. You could also start thinking more about your spending habits. Is all of it ‘necessary’ spending? For example, do you need that TV subscription or ten different newspapers?
- Changing your car - If you don’t want to live without a car, it might be worth it to change it. A smaller model with lower fuel costs could be more economical. If you and your partner both have cars, it’s worth thinking if you could do with a single set of wheels instead of two.
- Compare utility and insurance costs - It’s also worth looking into your utilities and insurance products. Make sure you regularly compare different providers and deals to guarantee you’re on the best deal.
- Take advantage of pensioner discounts - There are many discounts available for pensioners, from cinema tickets to train tickets. Always check to see if discounts apply whenever you are going to spend money, and favour providers that offer discounts.
You don’t have to live miserably in retirement! Simply take a more critical look at your spending habits and be smart about where you put your money.
Boost your income
You could also consider ways to boost your income. You might not have time left to grow your pension income. But it doesn’t mean you have to rely on your pension to maintain financial security. Here are a few options to keep in mind.
Income from your home
You could consider using your home as a source of income. If you have a lot of space and are not ready to downsize, consider taking in a lodger. If you have the money, you could even consider renting out the home while you downsize to a smaller flat.
Another way to get an income from your home is equity release. You’re essentially taking out a loan that gets paid when you sell your home later down the road. It can be an excellent way to boost your income, but there are certain downsides to it. But it’s something you could keep in mind if you need to increase your income.
Part-time work
Retirement doesn’t mean you have to stop working altogether. While you might have dreamt about the day you no longer have to get up to work, you could find yourself longing to do something with all the extra time. A growing number of people continue working part-time after they retire from full-time work. It might be that the ability to set your hours or decide on the work you do more freely makes you enjoy working again.
Sell unwanted things
You might have ended up with a big collection of books, furniture, albums, clothes and the like over the years. But instead of letting them gather dust in the attic, it might be time to start selling them. You could make a nice amount of money by getting rid of things you don’t need anymore. Selling unwanted items is also better than throwing them away! Check your local churches and community centres for second-hand events and jumble sales.
Invest your money
It’s also a good idea to invest part of your money. If you’ve not invested before, retirement can be a great time to start. It’s never too late!
You should consider different options, as you don’t want to put all your eggs in a single basket. There are different types of investment funds, offering long- and short-term gain. Investing always comes with risk, so consider talking to an independent advisor, especially if you’ve never invested before.
Retirement shouldn’t mean a lack of financial security
Maintaining financial security during retirement is essential. You never know what sudden expenses might come up. You want to have enough savings to respond to life’s little challenges. You should continue to save, be smart with your spending and look for ways to grow your income even after you stop working. Don’t forget to talk to a financial advisor if you find it challenging to make your money last on your own.
