How to balance having a fun and frugal lifestyle in retirement


Many retired Americans have to live on an income that is reduced from what they were accustomed to in their working years. Ideally, retirees have spent their careers wisely investing and preparing for their post-career lives – but even then, the adjustment to a retirement income can be a shock to their financial mindset.

Luckily, there are ways to live frugally and still achieve a high level of financial wellness. Frugality is a matter of interpretation – to live frugally, one doesn’t need to give up everything and live like a hermit. Instead, living a thrifty, yet fabulous, life in retirement is possible through a little extra discipline and attention to detail.

Here’s how retirees can get started living their desired lifestyle on an adjusted income:

Reassess the Budget. Many working individuals already had a tally of their monthly expenses, which they could then check against their income and figure out how much they needed to budget for in any given month. Retirees should track their spending on necessities (mortgage, electric bill, food, etc.) and recreation as well. Tallying monthly spending will help to plan for an adjusted income, and identify where spending habits may need adjustment.

Reduce Unnecessary Spending. Retirees should identify areas in which they can cut their recreational spending. This doesn’t mean they need to cut out all recreation – far from it. However, a couple that dines out twice a week can halve their restaurant expenses by cutting that number to once a week. Television is another example – premier cable packages can be very expensive, and subscribers may only watch a few of those channels. In this case, downgrading to basic cable, or even cutting the cord for subscription services like Netflix, can free up some extra money. By identifying costly recreational pursuits that can be scaled back, retirees can still have fun without depleting their monthly finances.

Downsize. Many times, retirees no longer need the space they did in previous years. Once the kids have flown the nest, the mortgage payment on a larger-than-necessary home (not to mention the cost to maintain it) becomes superfluous. An affordable house or apartment with less space to maintain (and pay for) is a valid option to cut down on costs and stress. Of course, this is a big decision and anyone considering it should carefully weigh the costs and benefits (not just financial) of anywhere they could potentially move.

Hunt for Deals. Now that the daily grind is over, there’s plenty more time to hunt for deals to cut down on expenses. Deal hunting is no longer just associated with clipping coupons, either (although this is an excellent way to cut back on grocery spending). Websites like Groupon and LivingSocial provide deals on premium products and services, local businesses, and even luxury travel. By avoiding sticker price on goods and services, retirees can still afford the things they want without having to scrimp as much in other areas.

Keep a Nest Egg. Anyone who has made it to retirement age has enough experience to know that life can throw curveballs their way. Unexpected medical bills, home or auto repairs, and other expensive surprises can decimate a monthly budget for those who are unprepared. By socking away money into an emergency fund, retirees can prepare for contingencies.

Pay Down Debt. Generally speaking, some debt can be a good thing. Holding a certain amount of debt and making regular payments helps people keep their credit scores current and healthy. However, paying down more “expensive debt” will help save money in the future. For example, a credit card balance with a 20% interest rate can be pretty expensive over time – paying this down will free up money that will otherwise be lost to interest accrual.

Save Up for Luxuries. Once retirees have identified ways to save money, they can put that money towards their priorities – which can and should include savings. However, those special expenses – the ones people actually dream about spending their retirement doing – are still within reach. A vacation fund is a perfect example. As retirees cut down on expenses, they can put a little bit toward their dream vacation each month – and before they know it, they’ll have a sizeable fund raised.

For many, retirement will require an adjustment to match new financial realities. However, this does not mean retirees have to give up all their hopes and plans. With lifestyle adjustments large and small, retired people can help make up for some of their reduced income, and still work towards the retirement lifestyle they aspire to have.

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