Being budget conscious does not necessarily mean that you have to deprive yourself of an enjoyable retirement. Of course the more money you have to retire with, the less you’ll have to worry and the best way to boost your retirement fund is to start saving early. Even those with limited retirement funds can benefit from some smart planning.
Re-Evaluate what you need
The first step is to create a retirement spending plan – where do you stand? The most important thing to consider when you create your retirement spending plan is whether or not the plan is reasonable. If it’s not, you probably won’t stick to it.
Mistake #1; the biggest mistake prospective retirees make is when they do not take a hard look at their overall retirement situation. Is your nest egg enough to generate retirement income for the next decade or more? Take a good look at your retirement situation because it could be time to downsize.
How much annual income will you need during retirement?
Financial planners suggest that you’ll need about 75 to 85 percent of your pre-retirement gross income to maintain your current standard of living. Of course, this can vary according to your lifestyle.
During retirement, you will pay less in taxes, save less, and you should have less of a mortgage burden than you did while working. While many expenses will decrease during retirement, many will increase.
Mistake #2; one in 10 Americans choose to downsize early, at the onset of retirement. Early planning to downsize to more affordable lifestyles can save you thousands every year. Only recently during our economic downfall have Americans began planning for retirement sooner than later. Why wait until you’re under water and barely surviving?
The practical alternative is smaller
Who said you would have to sacrifice the amenities when you downsize? The American dream was built around the idea of bigger is better but lifestyles have changed and the aging population are opting out of the “big” notions and choosing to keep it small. Retirees are turning to alternatives.
Whether it’s one-floor ranch styled homes, modular homes and manufactured homes or perhaps a home on wheels, retirees have a bevy of options to reduce living expenses.
Think about this – retirees require only the basics for living, sleeping, cooking and bathing. Do you really need several bedrooms, a family room, dining room, basement and more? This only translates into more electricity, more rooms to clean and more expenses.
Smart seniors realize that small can be advantageous, especially to the pockets.
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