Here comes your retirement and you can’t wait. You’re going to cash in your 401(k), draw on your pension, live on your investments and quit work permanently. Life could be carefree -- but plan carefully. Here are some tips for living well in retirement.
Plan on spending lessWith no paycheck coming in, you will likely need to cut down on expenses. Here are a few suggestions on how to keep costs down once you retire:
- Ask for seniors’ discounts. Seniors are eligible for discounts on a wide range of consumer items. To name just a few: movie admissions, hotels, restaurants, magazines, train tickets. Your credit card company might even be willing to cut your interest rate. Always ask before you spend your money -- you might be surprised.
- Comparison shop. Explore all options before every major expense. You may find that you can get a better price than your seniors’ discount for airfare, for example, by flying off-season or out of a different airport, or by using a different airline. In addition, the Internet can be a rich source of deals. Websites such as Wired Seniors and The Seniors Advisory offer discounts to seniors.
- Slash your insurance costs. If you’re retired and your children are now independent, you may not need as much life insurance as before. There are also a number of ways to reduce your home and car insurance costs. You could raise your deductible, for instance. The deductible is the amount you have to pay before the insurance coverage kicks in, should you make a claim. Opting for a $1,000 or $500 deductible instead of a $250 deductible for both home and auto insurance could save you money every year. Many companies also provide a discount if you buy all your property insurance from them. And designating your younger spouse as the principal driver of the family car, rather than you, could reduce your car insurance costs.
- Pay less for drugs. Always ask your doctor if there is a generic version of the prescription drug you need. Generally, it will be cheaper than the brand name version. Shop around among drug stores -- prices may vary. In addition, Medicare provides information about programs that offer discounted or free medication.
- Cut down on transportation expenses. Cars can really guzzle up the dollars, so consider selling your second car. Whenever possible, walk or bike. And if you’ve just finished paying off your automobile, keep putting the monthly payment in the bank; you can use the money to purchase your next car when you need one.
- Get a reverse mortgage. If you are 62 or over and own your own home, consider drawing on the equity of your home through a reverse mortgage. The funds won’t have to be repaid until you move or pass away.
Develop a budget, and live within itFinally -- and even more significantly -- sit down, with your partner if you are living with someone, and figure out what your total monthly income will be. Then estimate your new monthly expenses. You should divide the cash going out into fixed expenses, such as your mortgage costs and car payments, and expenses that can vary from month to month, such as food and entertainment. That way, you can plan to pay your fixed expenses first.