Congratulations! You’re nearing retirement and looking for ways to get ready. If you’re like most people, you’ve probably been thinking about the fun stuff for a while. You know how much you’d like to travel. You might even have a pretty good idea of where you want to live. Now comes the hard part: figuring out how to pay for it all.
One of the most significant changes you’re going to experience with retirement will most likely be in a shift of income level. The sad truth is, most people don’t have enough to live the same lifestyle they enjoyed pre-retirement. However, if you’re willing to put the work in now before you leave your job, it can make the transition much easier and seamless. This serves a two-fold benefit. First, you’ll get used to living on a different income than you do presently, as one in three people who retire don’t have enough money to maintain their current lifestyle. Secondly, you might even be able to set aside a few extra funds to carry you through your retirement years.
It starts with downsizing your expenses, both to save money and to help adjust easier once you do retire.
How do you do that? Start with these smart recommendations to help get you on track:
Define Your Retirement
Do you have a clear idea of what your retirement will look like? If not, now is the time to figure it out. Are you retiring fully or working part-time? Are you traveling or staying at home? Do you want to move? Figuring these things out now will help you to create a more accurate budget of your future needs, so you know what you need to set aside still today.
Create a Proper Budget
Have you been in the habit of budgeting? If not, now is the time to figure it out. Tracking your current expenses is a great way to get an idea of what your future expenses will be.
How often do you drive? Do you have more than one vehicle? Do you need both? These are things to think about as you retire. Reducing vehicles or switching over to public transport can save you a lot of money in the long run. If you don’t go to many places, you might even think about switching over to a service like Uber or Lyft.
Drop the Debt
Anything high-interest should be gotten rid of as soon as possible. If you can, consolidating everything and getting a single loan to pay it all off now might wind up saving you considerably when you add up fees and interest. Talk to your financial counselor about the best options.
Give Yourself a Check-Up
How is your health? Medical expenses, once you retire, tend to increase with every passing year. While you can’t always control this aspect of things, you can work now to manage your health better. By taking the time to get in shape and build a solid exercise regime and good dietary habits, you can prevent a lot of high-ticket health problems such as heart disease or diabetes. What’s more, even if you already have some of these issues, working to build up your health will help prevent further complications from developing. This just makes sense, no matter how you look at it.
Re-think Your Mortgage
If you can, paying off your house before you retire takes a massive chunk of your expenses off the table completely. Or it might be possible to refinance for a lower interest rate if you’re not close to having it paid off.
What About Insurance?
No matter what, you’re going to need health insurance. Life insurance, though, is trickier with a lot more options. Be sure to talk to someone knowledgeable about this to make sure you’re optimizing your choices.
Finally, talk to a financial advisor if you’re having trouble getting a handle on expenses. They can go through your expenditures with you and recommend ways to cut things you might not have considered on your own.
Downsizing expenses doesn’t have to be overly complicated, nor do you need to be a math whiz to figure this out. Simply put these tips into practice, and you’ll start seeing the benefits quickly.
When you first start minimizing your expenses, you’re going to be surprised at how quickly you can free up funds. This is a good thing! The trick, though, is to take the excess and put it away for later.
The team at Pension Solutions Canada are here to help make sure you’re set up for success. We specialize in helping individuals prepare for retirement and understand their pension options. Let us assess and review your income streams in retirement and help you with retirement planning. Call us at 1-888-554-6661.