Finances Don’t Have To Be All-Consuming in Retirement

Updated on March 12, 2019

Imagine finally reaching retirement only to discover you face significant financial questions that don’t seem to have any good answers. This scenario is occurring more frequently as time goes by. Unfortunately, an entire generation of people facing retirement age suddenly finds themselves feeling lost because they didn’t take the time to think and plan while they were still working. The good news is that it doesn’t have to be this way. Finances do not have to be all-consuming in retirement.

Enjoying your retirement years from a financial standpoint begins with planning. Ideally, retirement planning would begin in your 20s. But maybe that train left the station decades ago. Maybe you are now in your 50s. Fair enough. But you are never too old to start planning. There are things you can do even now to prepare yourself for retirement.

Look at Your Housing

Housing generally constitutes the single biggest expense couples and families will pay over the course of their lifetimes. Housing expenses continue to press a person’s finances in retirement. How should you address them? By looking at your current housing situation and comparing it to less expensive options.

Perhaps you live in a large house you no longer need. Downsizing to a smaller, less expensive house might be the perfect solution for both your finances and your lifestyle. Furthermore, there are plenty of financing options. More and more lenders are offering affordable mortgages for 50 plus-year-olds.

Look at Your Pensions

While you are investigating a 50-plus mortgage to meet your housing needs, take a look at your pensions too. Any lenders you approach will want information about your pensions anyway, so it’s good motivation to really try to figure out what’s going on.

You are going to receive the state pension in retirement as long as you contributed to National Insurance while you worked. However, the length of time you contributed to the scheme will ultimately determine the value of your state pension. So visit the GOV.UK website and get an estimate of what your pension might be.

Next, look at your private pensions. These are pensions that you invested in through your employers. If you can live entirely off that income, you might consider delaying your state pension for a few years in order to increase its value. You might also consider taking some of your private pension money as a lump sum cash payment so that it can be invested in something capable of generating a larger return.

The best thing about pensions is that they can be adapted to fit a variety of circumstances. Pension money represents a great tool for securing your finances during retirement. You just have to know how to use the money wisely.

Look at Your Current Lifestyle

All of this talk about mortgages and pensions leads us to the next tip: looking at your current lifestyle. If you are like most people, the lifestyle you now live is the same lifestyle you want to carry into retirement. That is both reasonable and expected. But based on what you know about your pensions, is it realistic?

Here’s why we ask: maintaining the kind of lifestyle you hope to live during retirement may require that you cut back on some of the things you do now. We can use travel is an example. You may have plans to travel throughout Europe, or even across the world, in retirement.

If it doesn’t look like your retirement income will support so much travel, maybe it would be better to pull back on travel now. Rather than taking two trips per year, consider taking just one. Or perhaps take one trip every two years. All of the money you would have otherwise spent on travel can be saved for future travel. Cutting back now gives you more money to work with in retirement.

Learn to Live on a Budget

It is surprising how many people don’t rely on a budget to manage their day-to-day finances. Perhaps that’s why so many individuals find themselves overwhelmed by debt. Even if all the other things described in this post don’t help you improve your finances in retirement, learning to live on a budget will.

A budget serves as a guideline for spending based on known expenses and income. It provides a blueprint that alleviates the need to worry about finances. How so? By giving you a record of what you have coming in and what you’re paying out. As simple as it sounds, budgeting works.

Finances do not have to be all consuming in retirement. Taking some steps now to better prepare yourself will mean you can enjoy your retirement without having to worry about money. If you have not yet started planning, get started right away. More time spent planning means more options for managing your finances.


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