Retirement is traditionally the time in which older people can enjoy the money that they have worked so hard to earn earlier in life. Whether it means travelling, refurbishing the house or giving a monetary gift to a loved one in need (or all three!), retirement is often the time when you can put those long awaited plans into action. Nevertheless, adjusting to your new financial situation when you retire can be somewhat tricky. Here are three top tips to help you to navigate the financial aspects of post-retirement life.
1. Build a budget for your retirement years
You will usually have a fixed amount of money to spend during your retirement, and so it is advisable to create a budget for your spending. How much money will you spend on household bills, travel and pets? How much will you have leftover to spend on luxuries for yourself and others? If possible, it is a good idea to get ahead with your planning and to create your retirement budget at least a year before you retire. Budgeting software, a financial adviser, or a good old fashioned spreadsheet can all help you out here.
2. Think about how to cut down on spending
Retirement is a time for making changes in your life, and one of those might be the way in which you spend your money. Perhaps you had bought an expensive car to take to work and had been spending a lot of money on fuel for it. Do you really need this item when you are retired? Selling it (or replacing it with a cheaper model) will provide you with a nice lump sum to spend during your retirement, and the reduction in spending on fuel will free up some cash to spend on other things after you have stopped working. Look for other ways to make changes like this one, so that you can maximise the efficiency of your post-retirement spending.
3. Work out how to increase your income during retirement
There are several ways to ensure that you have a steady stream of money flowing into your bank account during retirement. The first is to increase your pension contributions by as much as you can afford during the last few years of working life. The second is to think about using your home as a source of income: could you rent out your home, or some rooms in it, on a permanent or temporary basis? Thirdly and finally, many retired people continue doing some kind of work. You want to be able to enjoy your retirement, of course, and to relax as much as possible. However, if there is some kind of work that you enjoy, find fulfilling, and do not find to be too strenuous, it could provide you with a way to supplement your pension during those heady years of retirement.