When you’re heading into retirement, almost by definition, you’re bringing in far less money than you did when you were working. This is especially so if you’re going to be reliant on the state pension. As such, it’s essential that you look after your finances. This will help you to avoid money troubles and to get the most from all of that free time stretching out ahead of you.
Once you’ve established how much money you have to play with, you can work out how much you can reasonably spend on any given month or year. Budgeting for retirement isn’t always straightforward. You might want to leave a substantial chunk of your savings to your children, or to charitable causes – while still leaving enough to live off.
You might divide your budget into categories, just so that you don’t allow your finances to run away from you. Set aside a reasonable amount for food, entertainment, and any healthcare. You’re likely to want to do some holidaying throughout your retirement, so make sure there’s a reasonable amount for that each year, too.
Making extra money
Some retirees might look to supplement their income from a pension with the help of a side hustle. This is a part-time job that’s based on a hobby. So, if you’ve decided to take up pottery, you might sell your creations at local markets for a profit. Get really good at it, and you might even make a lot of money.
Naturally, you should make sure that you’re still enjoying your retirement while you’re doing this – otherwise, you’ll defeat the purpose of it. Of course, there are other ways of generating income, too; if you own your own home, then you might consider taking out an equity release mortgage to give you some more spending money.
Keep track of your outgoings
Having set up your budget, you’ll need to monitor your outgoings, and thereby ensure that you’re actually sticking to it. Keeping an eye on your bank statements, with the help of a mobile phone banking app, will allow you to do this fairly easily. It’s actually far more secure than traditional forms of banking.
You should always be wary of fraud. If you get unsolicited text messages or suspicious emails, don’t click on any links.
Create retirement goals
If you need an incentive to save, then it makes sense to think up a goal. If you’ve always wanted to do something, whether it’s visiting a certain part of the world, putting your children through university, or making a big donation to a favorite charity (or, even better, many small ongoing donations), then it makes sense to make that goal a more concrete ambition. Write your dream down, figure out how much you need to save, and make it part of your budget.