During the past few years, our CASCO team has provided design work for senior living facilities across the county. While designing these facilities, it’s important to understand the occupants’ needs and wants. With retirement comes relaxation, but also great responsibility. Karen Weeks of ElderWellness wrote the following article providing tips for those entering retirement on a fixed income.
Retiring is your opportunity to pursue the things you enjoy most during your golden years. You suddenly have the freedom and the schedule to spend your days how you’d like: whether that means dedicating time to beloved hobbies, taking a class to learn about an interesting topic, or simply spending more time with friends and family. Many seniors worry that they don’t have the finances to enjoy their retirement.
Living on a fixed income does come with challenges, but with forethought and a solid plan, you can meet your needs and enjoy your aspirations.
Long-Term Cost Cutters
When you’re living on a fixed income, the last thing you need are surprise expenses. An emergency fund is a smart safety net, but there are several ways you can protect yourself from big unexpected costs beyond simply setting aside money. For example, it’s important to make sure you have the best possible health insurance. If you’re a Medicare subscriber, consider switching to a Medicare Advantage Plan when Medicare Open Enrollment rolls around (beginning Oct 15). This may mean spending a little bit more each month, but the reduction in your out-of-pocket, thanks to broader coverage, can save you in the long run.
If you still have a cable or satellite subscription, it’s time to pare down to a streaming device and ditch those hefty bills. Those who’ve cut the cord have seen a significant decrease in their entertainment costs, and there’s no missing out on favorite programming. A streaming device plugs right into your TV, and with a wifi connection, you can have immediate access to shows and movies.
Understanding Your Fixed Income
Living on a fixed income can take some getting used to, and it’s crucial to make sure you know exactly how much you have to work with. Take some time to assess your finances. Write down any sources of monthly income, and make a note of which sources are fixed, like money from a retirement account, and which are variable, like income from a part-time job or money-making hobby.
Keep in mind that fixed income sources such as retirement and Social Security don’t grow, but they don’t shrink either since the payments remain the same. Base your budget on the fixed portion of your income, and treat anything above that as a bonus. Just remember, as The Balance notes, there is a limit on how much extra you can earn without penalty, so tally those dollars as they roll in.
Budget Building Tips
Once you fully understand your income, you can start figuring out the best ways to spend your money through the month. Start by tracking your spending and simply observing where it goes. This will give you a strong starting point, as well as a sense of what kind of spending is and isn’t flexible.
For example, monthly bills typically fall within a specific range every billing cycle, and you may have little to no ability to make them cost less. However, if you see that you spend $10 a day at a local bakery, you may be able to cut that cost by visiting the bakery less often, or learning to bake at home. Once you have a sense for what you spend each month, set limits and stick with them.
Extra Income Avenues
Finally, remember that just because you’re retired, doesn’t mean you can’t work. If you love the career you had, consider taking on freelance work as a contractor or a consultant. Alternatively, Good Financial Cents points out you may have ways of monetizing the hobby you finally have time for, such as selling knitted items or performing as a professional musician. Even little bits of extra income can add up, providing extra freedom and security.
A fixed income comes with limits, but make it your goal to tackle those limits head-on. Establish a budget, earn some money where you want, and shop around for your necessities. By proactively managing your financial situation, you can make sure you have the funds to fully enjoy your golden years.