Making Lifestyle Changes
Budgeting In Retirement
Don’t you love the advertisements that show retirees sailing into the sunset on the 50′ yacht or swimming gracefully in their even longer swimming pools? I couldn’t manage that when I was earning a good salary! Let’s get real. Most of us expect to change our lifestyles when we retire. Just how much depends on what the financial planners refer to as “fiscal security opportunities” but it all boils down to money in the bank really. My “10 Top Tips” to budgeting in retirement can be adapted and applied to where ever you place yourself along that scale.
1. Starting Point
Ideally your starting point would be before you retire! You will have paid off any hire purchase agreements, finished paying the car off and some of you will be living mortgage free. Well done if you are but don’t beat yourself up if you’re not! The long term goal is to reduce your outgoings and the pinnacle of this goal is to become debt free. Therefore, the best place to start is to ruthlessly assess where you are now. It is scary but start with the small stuff so you know you can survive without the glossy magazine subscriptions and that there are alternatives to your gym membership. Take a look at Fitness on a Budget for motivation! How debt free you need to be depends on your future retirement income. I opted for the full Monty and the lifestyle changes were pretty big but definitely worth it.
Have you noticed a change in the acceptance to the word downsizing? I seem to remember when the size of your retirement home was seen as a reflection of your success and social worth. It now seems that downsizing can be your environmental responsibility! Others of course are more pragmatic and see it as Baby Boomers giving themselves more time to enjoy life and reduce housework and gardening. If you have a mortgage then downsizing is the most obvious way to eliminate a large chunk of your outgoings. It also has the advantage of giving you cash in hand when you sell off your unwanted furniture. I downsized to a boat and a campervan. In all honesty I can’t say I enjoyed the process but the end result was well worth it!
3. Share With Purpose
Sharing with purpose is not up there with sharing altruistically but it can be a positive experience for both parties. There are many reasons why downsizing your home is a step too far for some and that’s OK. Work with where you are. Perhaps sharing a room is something you can do? I have a friend who does this and he gets some rent to offset his mortgage as well as someone to take care of the upkeep when he’s on holiday. A win win situation. Air BNB is also growing in popularity and you have the advantage of trying it once and if you don’t like it you can opt out. Sharing can be even simpler than sharing your home. Car sharing reduces your outgoings and is environmentally responsible. I’ve even heard of people sharing their lawnmower in return for having their own lawns taken of.
4. Use Alternatives
The success with finding alternatives depends on two things. Firstly, how good you are at thinking outside the box. Secondly, how willing you are to make changes to your lifestyle. The good thing about this is that the more you do it the better at it you become! Take my magazine example earlier. I use to be a sucker for a headline, buy a magazine and finish reading it before my coffee was cool enough to drink! Now, the library is more than a place I go to and save money on buying books. I now get DVD’s, magazines, puzzles for my neighbour and if I time it right, free lessons on the latest computer technology! Oh, did I mention the FREE INTERNET
5. Discounts Come In All Shapes & Sizes
The obvious place to start using discounts is your local paper. In some countries I have read that, if you are able to spend a lot of time on it, you can feed your family for free! Here in Australia we go for the “specials”, BYGYF (buy one get one free) and % discounts. Once you get into the rhythm of it you never have to pay full price for anything. My favourite is hanging out for the large tin of coffee that is the equivalent of one free packet. The most exciting discount I have discovered though is two FREE return trips by train anywhere in Queensland! Naturally I am looking for the longest trip I can find (2,131 miles / 3 430 kilometres to Darwin sounds just about right!) Discounting does require both planning and discipline. If you know you do not have the will power to wait for something you want to be discounted then the better you must be at planning!
6. Face Up To Red Tape
Personally I find this the hardest to deal with. I have spent a life time dealing with it in one form or another so it really shouldn’t be a problem. I’ve tried dealing with it by phone and by email but eventually it usually needs face to face contact. My tips for dealing with this situation starts with accepting that having an appointment time will not reduce the length of time I have to wait (I don’t even like waiting for the water to get hot in the shower!) Accepting the inevitable wait times at least gives me the opportunity to come prepared. Water and a good book are my starting points as I never rely on being able to get a phone signal. Once the wait is over I am prepared with paper work and a clear understanding of what it is I have come for. A few stock phrases such as, “Perhaps you can get someone who can help?” and “I know it’s not your fault my …………..wasn’t paid”. Above all keep smiling it’s contagious. Remember your entitlements are just that…yours!
7. Ask Questions
Retirement is a peculiar life stage. We prepare children for school, educate for workforce and child birth. During these life stages we learn by asking questions. In support groups we offer help by asking questions. I did not know that my local council provided many free social opportunities, entertainment, free transport and subsidies until I started asking questions. At every opportunity think of it as research. You are not being nosey! Ask questions in the chemist. There may be a less expensive medication available i.e. a generic brand that is not always offered in the first instance. Ask questions when your friends are talking about their holidays. Find out which was the best value for money hotel. Ask questions at the bank. Are you using the best account? The upside of joining group activities in retirement is that you have many more opportunities to ask questions. Knowledge is power after all.
8. Stop pretending: Talk to the family
Retirement can be a time of changing lifestyles for the whole family. If you have spent your working life providing not only emotional support but also financial family members need to be reminded that “times they are a changing” The level of change depends on individual circumstance. For some, the changes may be small, others a lot more. Whatever, the conversations need to happen. Picking up the tab when eating out may be a thing of the past but they can be replaced by different family activities. I am not advocating that you become a grumbling Scrooge. If you put your mind to finding alternatives you may discover that the simpler things you used to do when the children were little are the memories they remember most! Personally I love pot luck picnics. As my children are scattered in both hemispheres we talked about my visits being spending time with them in their everyday lives. I am not a tourist that needs to be entertained. Nothing beats story time with the grandchildren anyway!
9. Barter: It’s the oldest form currency
The idea of bartering may make feel uncomfortable but in some countries bartering has cultural acceptance. There is something very satisfying in bartering that you don’t get when money changes hand. I love babies (anybody’s!) so baby sitting in exchange for heavy gardening gets my vote every time. I know gardeners who happily exchange tomatoes for oranges. Creativity is an essential part in any negotiations. Successful bartering should always have a positive result for both parties. It also has the added advantage of being a desirable social interaction. As social interactions have been linked to a healthier and longer life it seems an option worth trying.
10 Plan Ahead
Budgeting in retirement is a balancing act but planning can and should be part of that act. Perhaps the hardest part of a budget is for the unexpected. How hard, again depends on your starting point. The best advice is the old adage, “Take care of the pennies and the pounds will take care of themselves!” It can be as simple as leaving the car in a garage and walking! Adding unexpected expenses to your budget may seem like wishful thinking but try to get into the habit of putting aside just a little amount. I tell myself that if the unexpected doesn’t happed then it can be used for a holiday treat. I see no reason why balancing my budget shouldn’t include a holiday! My holidays are taken care of by housesitting. I’ll be writing about that in a later post!