My mother was recently forced to retire and she was completely unprepared to support herself with the monthly income she was going to receive. She was never much for budgeting money and I think that was because she never knew how. Had she been taught to save money or create a retirement account much earlier, she would have been in much better financial shape than she is now. Because she did not really understand how to handle her finances,she could have used help with financial planning. This article from Fox Business which gave “Five Tips To Make Your Retirement Cheaper” really hit home for me. I did not want to make the same financial mistake and be as financially illiterate as my mother was. To avoid being in the same situation, I am going to be proactive rather than reactive when it comes to my long term financial plans. The article had some solid advice on making a budget and sticking to it since you will be on a strict fixed income. The video below also helps provide life insurance information.
- Create a Budget: The most crucial thing to do to get on track is to create a budget. The article showed that 30% of renters are 65 and older and they did not have a budget they follow. The best thing one can do if they find themselves in this situation is to get prepared. The article advised taking one month to record your spending habits in categories like, food, rent, entertainment and food. At the end of the month, review the numbers and find area to cut back spending.
- Shop Smart: A survey from Rent.com showed that 58% of 65 and older said they could not meet their bills due to the steady rise of costs.renters say rising costs. These higher and often unexpected costs made it hard for the seniors to meet their basic monthly expenses. The article recommends buying household items in bulk, watch the sale fliers and clip coupons.
- Manage your Medications: If you are on a regime of medication, talk to your doctor about lower priced alternatives. Often, your doctor can prescribe a generic or different medication that will work just as well. You also need to check your pharmacy prices and compare with others in your area as they are not always the same. Many pharmacies offer a small flat price for generic medications, so check with yours and ask if they offer that plan.
- Reduce Monthly Home Expenses: While your rent or mortgage are fixed, many of your other expenses are not. Many utility companies offer a monthly budget plan that averages your bill and you pay a fixed amount each moth. Look over your cable and phone bills and check for features you can do without. By just making a few small changes, you can save a fair amount each moth.
- Entertainment: Often times when people retire, they have a huge void in their days. When trying to fill this void, often find themselves looking for ways to fill their schedules. Unfortunately, entertainment costs like travel, food and movies can add up fast. Check your local newspaper, church or community center for free classes or events.
I appreciated this article which helped point me in a direction that helps me understand why being financial literate is so important. Understanding financial terms and how budgets work is the best way to get yourself on the road to a healthy retirement. Retirement should be a time of relaxation and enjoyment, not worry and stress. I love that Genworth Financial has some very helpful tools and information about budgeting for retirement. I am able to use their “Budget Calculator” which helps me with my financial choices and refer back to this link to guide my decision for choosing the right retirement plan.