Today's guest article, Make Your Fixed Income Count With Senior Budgeting Tips is written by the owner of the financial help website "Ted Knows Money". Ted James specializes in private, one-on-one coaching and counselling sessions to help people take control of their finances.
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Half of retired Americans left the workforce before age 62, and almost a quarter left between 62 and 64, according to the Board of Governors of the Federal Reserve System. Whether you're newly retired or need help adjusting to a fixed income, these tips will help you stay within your budget while enjoying your golden years.
Create a Budget
Knowing how much you get each month makes budgeting easier. Calculate all retirement income, which likely includes Social Security if you're like the 89% of retirees who rely on it, according to Gallup. Pension plans, retirement savings plans, and other savings plans are also popular.
Start with must-pay fixed expenses, such as housing, loan payments, and insurance. Add necessary fluctuating expenses like food. Extra spending, like entertainment, comes last if there's leftover money.
Cut Your Debt
Getting rid of credit card debt and not taking on more debt helps you maximize your fixed income. Plan to pay off debt quickly. Retiring with as little debt as possible stretches your retirement dollars.
Downsize Your Life
Moving to a smaller, cheaper home cuts your housing payment significantly. You can sell furniture you don't need for extra cash and have reduced maintenance requirements to save time and money. Your homeowner's insurance might also decrease. Before downsizing, calculate your home equity to learn how much you could earn from a sale. Then use a mortgage calculator from Money Solutions Online to help you determine how much you can spend on your new home.
Save Other Ways
Lowering your spending frees up more of your fixed income. Look for subscriptions and memberships you can cut. Set a lower spending limit on entertainment, clothes, and other nonessentials. Use senior discounts and look for sales when you shop.
Enjoy Low-Cost Entertainment
Rethinking entertainment lets you enjoy your favorite things without spending much money. If you love live music, attend free music events at the park instead of buying concert tickets. Avid readers save money and squeeze in socialization by going to the library instead of buying new books. Senior centers often have free or low-cost classes and entertainment. You could also join a prayer group at church.
Use Assistance Programs
Explore senior assistance programs for your needs. For example, the Low Income Home Energy Assistance Program can cover some of your energy bills. Meals on Wheels can help you with food. Look at local, state, and federal programs that help seniors.
Protect Your Health
Staying healthy reduces your health care needs by preventing diseases and injuries. Choose exercise that's safe for your current health condition. Joining a senior exercise class is an easy option. Make modifications to your home to prevent falls. Adding grab bars and reducing tripping hazards are examples.
If your retirement income isn't enough to pay the bills, working part-time offers income without consuming all your time. According to the LIMRA Secure Retirement Institute, 27% of retirees and pre-retirees expect to work part-time after retirement.
Another flexible option for part-time income is freelancing using your current skill set. There are many jobs that you can do from home such as being a writer or virtual assistant. You may want to think about forming a limited liability company (LLC) for your gig-based business to limit your personal liability, offer tax benefits, and reduce paperwork. Regulations and processes to form an LLC vary by state. Instead of doing the paperwork yourself or hiring an expensive lawyer, consider a formation service to handle the process affordably.
Budget Your Money Better
When you're on a fixed income, handling your finances can be difficult. But with the tips above, you’ll be able to create a budget that lets you enjoy life without overspending.