How do you picture retirement? Is it adventures with the grandkids? Vacations with friends? That sounds idyllic, but it’s not always realistic portrayal of retirement.
According to the 2019 Sun Life Barometer, nearly a quarter of retirees describe their lifestyle as “frugal.” And more than half believe they have a serious risk of outliving their retirement savings.
So how can you avoid such a scenario and get the retirement you want? As you look ahead to your golden years, ask yourself if you’ll have enough money to sustain your lifestyle. Consider what you can do to shore up your finances so that a little frivolity won’t break the bank.
What does your retirement budget look like?
The first place to start your retirement planning is to take a serious look at your retirement budget. It’s important to do that while you still have time to make necessary changes. Then you can start listing out expected expenses to identify potential gaps.
- Try this retirement savings calculator to see where you are with your retirement goals.
- How much retirement income will you need? Here’s how you can find out.
Expenses that may go down in retirement
The good news is, there are a few places you'll likely spend less in retirement. For example, take time over the next few months to calculate what you spend on day-to-day items. That can include things like:
- commuting costs,
- going out to lunch,
- takeout dinners and
- your wardrobe, including cleaning costs.
When you're no longer working, those costs are likely to decrease.
Expenses that may rise in retirement
Now, turn to areas where your retirement expenses may increase. Be realistic so you can build a sensible budget. For example, consider those eating-out costs. In retirement, you’ll have more time to cook but may prefer to eat out as a way to socialize.
Other entertainment costs may increase too, as you have the luxury of visiting museums and seeing movies anytime. Plus, you may be looking forward to fleeing the cold winters on more vacations.
- If your retirement dream is to head south for the winter, here’s what you need to know before you go.
Finally, don’t underestimate the potential for increased medical costs. Many retirees are blindsided by the cost of ongoing care as they age.
- Nothing can derail retirement plans faster than unexpected health issues. Here are four — and what you can do to avoid them.
How to start reducing your expenses before you retire
After crunching the numbers on your retirement budget, now is the time to make some painless changes to your lifestyle. Here are seven simple tips for saving money in the years leading up to your retirement.
1. Cancel subscriptions you don’t want or need.
Streaming movies and music is fantastic, but the costs can creep up as you add new services. Since they’re likely billed to your credit card, it’s easy to forget how many different plans you’re using. Pull out the credit card statements to find any recurring charges. Then decide if there are ones you can cut, or if you could drop down a tier of service.
2. Negotiate lower bills to save money.
Speaking of recurring charges, consider your monthly bills and make a call about getting a better rate. Your provider for car insurance, phone service or home security might reduce your monthly fee on the spot.
3. Cut back on services.
During your busiest professional years, you might have started hiring help with various tasks—from housecleaning to yard maintenance. Calculate how much you’re spending, and consider taking on those tasks yourself.
4. Find discounts sales and deals online.
No matter what you’re buying, wouldn’t it feel great to pay less? With one quick internet search, you might find codes for anything from a percentage discount to free shipping. Simply plug “name of store + discount” into a search engine: it’s always worth the look.
5. Save money on food.
Eating out is the obvious place you can cut back. But most people also overspend at the grocery store, too. It’s easy to make impulse buys or purchase ingredients they don’t use. Meal planning and making a list before you hit the store can save big bucks - and prevent food waste. And you’ll likely eat healthier, too, which can help guard against costly diseases in the long run.
6. Get professional help with your finances.
Need help building your retirement plan? Make an appointment to review your finances with an advisor. They can help identify gaps in your savings and proposed spending so you have time to make needed changes.
- Find an advisor near you.
- 5 tips for finding an advisor you can trust
- Retiring unexpectedly? Here’s how your advisor can help.
7. Keep saving and keep dreaming big.
After all, you’ve worked hard, and you deserve the chance to enjoy it. The more you save now, the more you’ll have to spend when those retirement days finally roll around.
- How to keep more of your retirement income and pay less tax
- Pay off debt or save for retirement? Here’s how to prepare financially for the future.