Since you’re reading this, we assume you’re a member of a rapidly growing group of Americans: those of us who are planning to retire in the near future. Now that you’re retired, it’s time to start making plans to manage your money wisely. In fact, you should be thinking about this issue even if you’re not quite ready to retire yet. Right now, you can make decisions that will impact your eventual retirement income, and these decisions will likely impact your ability to survive retirement as well as the quality of your retirement.
There is a lot of work involved in living with less in retirement. A lot of planning is involved, for one thing. You have to figure out how much you can spend in different areas, and how much you can withdraw each year from your nest egg, and what you can do or not do to keep your regular income up when Social Security and other sources aren’t available.
- Know how much you earn
The best way to know how much your making is to track your expenses. Throw all your receipts and bills into a box, and once a week, sort them out and add them up. When you can’t remember how much you spent on a certain item, look it up on your bank statement. This is the best way to get a clear understanding of your financial situation.
- Spend less
You want to retire one day, but you don’t have a lot of money saved up. You want to retire early, but you don’t have enough to live on your savings alone. So, how can you retire and live a life that you enjoy? You need to live below your means. This means that you spend less money than you bring in. It’s as simple as that. If you spend less than you earn, you will have a surplus. This surplus can be saved and used for retirement.
- Boost your revenue
You have been working for years to get your retirement plan together. You have spent long hours at your job, scrimping, saving, and planning to have enough retirement income to support yourself in your old age. You have been gently setting money aside in, or taking advantage of, an employer-sponsored retirement plan that is available to you.
Now, you are close to being able to retire. You will soon be able to sit back and relax, knowing that you have done your part to be able to live a secure retirement. However, there is still one more thing that you can do to make sure you have the retirement that you have been dreaming of for all of these years. It is time to start boosting your retirement income.
- Save for purchases
Wouldn’t it be great if you could do both? But if you want to save up for an emergency fund, a living expense fund, or any other expense in the future, you’ll have to put the purchase on a credit card. One of the best ways to save up for future purchases is to set up an emergency fund. This fund should be large enough so that you could cover six months of expenses if you lost your job and had to live off your savings.
- Make an emergency fund
For most of us, building an emergency fund is not a priority. It’s hard to plan for a rainy day when there’s enough to cover your monthly expenses. However, there will always be unexpected costs that come along and affect your money. Whether you are at risk of losing your job or facing a sudden medical bill, it is a good idea to have a little bit of money set aside if you need help.
When you were working, it was easy to get a handle on your expenses: take your monthly income and subtract your monthly expenses, and if you were ever short on cash, you could easily look at your spending and identify where you could cut back. But now that you’re retired, this is not necessarily as easy to do. Of course, if you’re living on a fixed income, it can be even more critical to living within your means in retirement.