The following is a guest post by Lisa @ Wallet Watcher, a personal finance blog providing budgeting and saving tips to help you keep more money in your wallet.
Normally, saving for retirement is all about having enough money – but what about planning to live frugally when that time comes? Maintaining the thought that ‘maybe you won’t need that much’ is much like the ostrich sticking his head in the sand to avoid reality. The cost of living is ever-rising, and there’s much to plan for when you finally leave your career and move forward with retirement.
Creating a reasonable retirement plan – and sticking to your budget while adding to your savings and retirement funds – can keep you on the road to retirement success. Read on for four thoughts on retiring frugally.
Attack Debt
The word “debt” is enough to incite fear into any budget. When you mix in the thought of retirement, the damage can be sustained – and stressful.
Make sure you evaluate any debt that applies to you. If you are planning for retirement, you don’t want to have to take into account debt of any type. Then you get into interest charges, the “what if” scenarios, and other troubling possibilities that can undermine your retirement.
You have to get rid of the problems before you move forward. Don’t ignore debt that you may have.
Where Will You Live? What Will You Drive?
Imagine if you lived in a place that was just the right size, when you retire. Imagine if you didn’t drive a car. Wouldn’t that allow you to save money, to truly retire frugally?
Owning a large home – even if you completely “own” it – can cost you. You will have to deal with maintenance, and that is just for those that are done paying off the house (see the previous section). Relieving yourself of a car in retirement is also another stressor, in terms of the payments, maintenance, insurance, and so forth. Will you really need a car when you are retired? For those who chose to reside in a retirement community, the answer might be a resounding ‘no’.
Lifestyle Changes
Many lifestyle changes may be made now – regardless of age.
Say you’re 25 years away from retirement. Now, multiply 300 (months) by the price of your cable or satellite bill, if you have one. Now compare it to $20 for a Netflix package (yes, they raised their prices – but it still likely beats your satellite or cable package!) – if the first number was $100 a month, then that’s a difference of $24,000.
By planning on such simple changes for your retirement, and implementing them now, you can get ready to live a frugal lifestyle. As you can imagine, there is much versatility in making these simple changes. You can capitalize on your finances and give yourself options.
Something like this can be combined with another item previously covered. For instance, if you live alone, perhaps owning your own home won’t be needed. You might prefer the community of a center where you can do fun things with other individuals – that would make a very large dent on your expenses.
Start Planning
Regardless of whether you want $500,000 to retire or $3,500,000, planning is important. The consequences of being “off” on the amount you need could be a problem. You can look at your projected expenses and plan as accurately as possible, being sure to leave a decent buffer zone.
Start looking at ways that you’ll be able to save money. Retirement doesn’t have to be about getting as much money as possible when you’re retired; you can enjoy the benefits of living frugally, now and in retirement. It can allow you to enjoy the more meaningful things in life. Your financial state of mind is key to planning for a comfortable future: having all your ducks in a row when you finally do retire can make the difference between living comfortably and scraping to survive.
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