Did you know that 71% of retirees are concerned about the effects of modern inflation on their retirement funds? Many people worry about making their money last during retirement, especially if they’re on a fixed income, but you don’t have to.
There are a plethora of tricks and strategies you can employ to stretch and even grow your monthly income. Many of them can work for you regardless of whether you implement them before or after you retire. Check out these six tips to help with budgeting for retirement community living.
1. Smash Your Debt
Debt is most peoples’ single greatest enemy when it comes to retirement financial planning. Servicing interest on debt during retirement is detrimental to your financial stability, especially if your loans are subject to interest rate shifts.
Luckily, paying off debt has the exact effect on your future cash flows, such as investing in assets that pay dividends or other income. You pay more now so that you can have extra cash for things like restaurants, senior living expenses, and even holidays later.
However, paying debt off is easier said than done. Our first sub-tip is to pay more than the bare minimum per account every month and start by getting rid of the most manageable debts.
For most people, these simple steps will get rid of most of their debts. If you have more debt than the average person, you can use tips two, three, and four just as quickly as part of your debt reduction plan. However, if you’re in serious debt, consider a debt restructuring solution to make this step as easy as it can get.
2. Downscale Where Possible (If Necessary)
One of the best financial tips for seniors is to get rid of unnecessary expenses. Some such expenses include:
- Phone contracts that are worth more than what you use them for
- Large or expensive cars you no longer use for long trips (including insurance)
- Unused time-share vacation options
- Spending money on food when you don’t need to
- Not taking advantage of senior discounts
There’s no closed list of things that may be unnecessary expenses. It’s wise to keep only those things that still add value to your daily life when retirement. This step also shows immediate results if you suddenly need a tighter budget after retiring.
It’s good to remember that moving into a retirement community can help you downscale in several ways. Many of the services offered can replace some of your budget items (for example, a communal gym and trainer eliminate the need for a commercial gym membership).
The only exception to this tip is not to be too hasty to sell your house if you own one. Even if it’s a monster to maintain, you can always rent it out (either acting as the landlord yourself or working with a rental agency). The extra rental income and the financial padding the asset gives you are always worth having.
3. Use Your Assets Well
This tip comes off the back of the caveat to our previous tip: utilize all the assets you have left in a way that works best for you. Some people only have a house and a car, while others may have IRAs, 401ks, stocks, and other investments. Whatever you have, be sure to use it to suit your financial goals.
For most people, this could mean making fixed withdrawals from their annuities as per their plans, but what if you outlast your annuity? As this becomes more common, one of the best financial tips for seniors is to ask a financial advisor if it’s possible to re-invest the bulk of the savings annuity and then only live off the interest.
It’s also advisable to keep any asset that generates income, such as real estate, stocks, and REITs. These will increase your monthly income and give you something you can liquidate in an emergency.
4. Take Advantage of Tax Breaks
Just being a senior citizen makes you eligible for several tax breaks. If you’re spending money on extra medical fees or are covering other similar expenses, you may qualify for many more deductions than you realize. Be sure to consult a tax professional to see whether you can deduct more from your annual tax bill.
5. Avoid Scams
Scammers of all kinds disproportionately target the elderly population. Falling victim to a scam can cost you anything from a few hundred to several thousand dollars. Moreover, scammers can take any disguise, from appearing as lawyers and doctors to helpful call center employees and people selling “profitable investments.”
If you don’t already have that skill, you must learn to spot scams. A great safeguard you can put in place is giving a trusted family member, attorney, or friend special powers of attorney to help you review the services you use. This will protect your retirement budget from being wiped out by scammers.
6. Get Professional Assistance
Financial planning professionals can be helpful in two different ways. The first is with their actual service: they can help find more possible tax breaks, structure your investments in a way that pays more, help make your spending more efficient, and help solve debt problems. Getting a professional to do these things saves you from the cost that trial-and-error may burden you with.
A financial planner, tax advisor, or similar professional can help you with any item. They can help you identify budget items to shrink or eliminate, help with debt, help screen for scams, and more.
Budgeting for Retirement Community Living That Makes Sense
Budgeting for retirement community living can be a daunting task for some, but there are always tactics you can employ to find financial success. The first step is to try to eliminate debt and any other unnecessary expenses. Make sure the assets you keep earn more money than they cost and make sure you use all the tax breaks you have available to you.
Getting professional financial advice can help with all of these steps and can help you screen for scams. For all your other retirement concerns, Seaton offers the best retirement community in Voorhees, NJ. Contact us today to plan a retirement that you will enjoy.
