Adjusting to a new income post-retirement can be difficult and you may find yourself falling into the habit of spending money that you longer have spare.
To avoid this, I have written this blog which outlines 5 tips on how to budget post-retirement so you can enjoy it rather than stressing about money. This blog will show you how to easily manage your finances on your new income.
Make a list of all your monthly outgoings
The first step to budgeting post-retirement is to create a list of all your money outgoings so you know exactly how much is going out of your account. This may not be something you would generally do, however now that you have to adjust to your new income, you may have to be stricter with the way you are spending your money.
When compiling this list, make sure to include everything that comes out of your account on a monthly basis, not just your bills. For example, you need to include basic things such as your average monthly food bill to non-essential expenditures such as getting your nails done each month.
Once you have compiled your list, deduct the total from your overall income so that you know how much you have leftover each month that you can spend on what you like.
Plan what you would like to do and set money aside for it
Now that you have a different income, it’s important to plan what you would like to do ahead of time so you can set aside money for it, although this generally applies to activities that will be more costly.
As you will have more free time during retirement, you will most likely take up hobbies at first to fill the time gaps during the day. If this is the case, take a look at your finances beforehand to ensure you can do so, especially if it’s a weekly club you would like to attend.
It’s also important to treat yourself during retirement such as going on holiday or city breaks, however, this comes at a cost. If you are planning on travelling during retirement, research everything beforehand so you can get the best deal. This will also give you a good idea of how much the entire trip will cost you so you can save for it.
Invest in a good funeral and life insurance plan
Altough it’s a morbid thought, investing in a good funeral and life insurance plan is imperative when you retire and could save your family thousands when you pass.
With funeral costs increasing significantly each year, having a pre-paid funeral plan is a great way to avoid a hefty bill when you pass. It also gives you control over the kind of funeral you would like. An over 50s funeral plan gives you the freedom to choose a plan that works for your budget that you can pay in monthly instalments.
Another thing to consider is life insurance as having the right cover is essential to financially protect your loved ones when you pass. Once again, there are many packages out there that will cater to your budget.
Set yourself a monthly spending limit
Although you have budgeted for your expenses, it is very easy to go over the budget you have for non-essentials due to all the spare time you will now have. Even though you may only overspend by £10 here and there, over time it will add up and it can be hard to get out of this routine.
To avoid this, set yourself a monthly spending limit that you cannot go over. It may be easier to put the rest of the money into a different account to ensure you only have the money available that you give yourself each month.
Set aside money for unexpected expenses
Many people tend to have a savings account for their retirement that is separate from their pension, however, I wouldn’t suggest using that money straight away.
Altough it is important to treat yourself, you also need to ensure that you have money set aside in case of an emergency so you don’t end up paying for an unexpected bill and have nothing left to fall back on.
If you already have a savings account, I would suggest only dipping into it when you really need to. If you do find your account running low, then top it up each month until you have enough money that you can fall back on if you need to.
If you don’t have a savings account then I would strongly suggest setting one up and adding a bit of money to it each month. Doing this will allow you to spend the money you have whilst knowing you have savings behind you.
To sum it up
Now that I have shared my tips on how to budget post-retirement, it’s time for you to apply these tips to your situation so you can enjoy retirement without having to worry about your finances.
My biggest tip would be to sit down and plan how much money you will have each month as you can plan what you would like to do around this. It is also important to have some money to fall back on should you need it.
