How to Fix Your Money Problems in Retirement
Everyone knows that the way to prepare for retirement is to save as much money as possible as early as possible and invest it wisely. We know this and it sounds simple but how many actually do it? According to some analysts only about 40% of retirees have the required funds to live a comfortable lifestyle after their working days are over. That means the majority of retirees are wondering how to fix your money problems in retirement, especially when retirement is right around the corner or already here. We cannot change the past but can influence the future and, if you’re looking at your financial situation as you enter into what should be a wonderful and fulfilling stage of life and feeling like money will be a problem, keep in mind that there are some steps you can take to address your situation. But you have to act quickly.
The first step is to get an accurate picture of your situation. Face reality and understand how big your problem is. This is critical and involves creating a retirement budget and understanding exactly what you’re spending your money on and how much money you have coming in. Look at every bill for the past year and track every dollar you spend going forward. Notice I said, “every dollar”. It is a critical step in correcting your financial shortfall. Look at your income and see what the gap is in meeting your everyday expenses. If your difficulties are caused by a single event such as big repair to your house, your car or a medical bill that wasn’t caused by insurance, that will need to be addressed separately. The main thing is to determine whether you have enough money coming in to cover your normal bills. When you look at how to fix your money problems in retirement, you want to have a clear understanding of your debt. If it’s a monthly deficit, you want to find a way to make yourself solvent each month by cutting expenses as much as possible. If your shortfall is a single large amount, you want to create a way to pay it off over time. If you have equity in your home, a second mortgage might be the answer IF you are able to handle the payments. We will mention other ways to uncover some “hidden” money that will also apply here.
If you're wondering how to fix your money problems in retirement, the first step is to determine the size and source of your problem.
The second part of this financial repair process is to examine every bill to see whether it is necessary or whether it can be reduced. Cutting costs in retirement is something everyone should do even if they have millions of dollars in the bank. Why pay more than you need to? The primary candidates for cost cutting are cable TV, insurance costs and your discretionary spending such as dining out and entertainment. Shopping around for better deals is usually time well spent and you can significantly reduce your expenses by auditing what you’re spending your money on. Are there subscriptions that can be eliminated, maintenance protection that you bought for an appliance that can be terminated? When you look at how to fix your money problems in retirement, one very big area is your residence itself. Is downsizing a possibility? The equity that has built up in your home can be leveraged in a number of ways. You can often move into something smaller and end up with a significant amount of money from the sale of your home or a lower rent if you do not own the place that you’re living in.
Some seniors look into a reverse mortgage which can give you extra cash to pay a big bill or invest for more income. This should be done carefully because there is a cost to a transaction such as this. My advice is to contact a financial advisor and proceed with caution. The same advice applies to insurance policies that you may still have in effect. Many times, a couple will take out an insurance policy to protect themselves when they have small children to support. By the time they reach retirement, that amount of protection is no longer needed and, quite often, those policies can be turned into cash. Again, do this only after thoroughly investigating all phases of any transaction.
The third area is something a lot of people overlook when they are faced with the question of how to fix your money problems in retirement and that is to increase your income. The phrase “fixed income” gets connected automatically to almost any retiree, but the truth is that there are many retirees who looked at their retirement income and became determined to do something about it. They knew that their pension and social security income was not going to be enough to live in the manner that they had dreamed about, so they took matters into their own hands. Some of them went out and got a job either to pay their bills or to save for something they wanted like a trip or a car. Others started a business by turning their hobby or interest into an extra source of income. A lot of them did this on the internet by starting a website. I can tell you from experience that it’s not only enjoyable, it provides a challenge that gets you motivated to learn new methods to increase the number of people who come by to visit. It can be as simple as selling some the “collectibles” that you’ve accumulated over the years. Why don’t you go through some of those boxes in the attic, basement or closet? You may be pleasantly surprised to find out that you have some items that are worth hundreds of dollars to the right buyer. We know someone who tried it once and developed her own little niche that brings in a few hundred dollars every month from her site on eBay. She lives on the outskirts of a very wealthy neighborhood and has found a couple of thrift stores where those well-to-do individuals donate their clothes. Guess where she gets her “stock” every month? She’s developed a nice clientele and even gets some requests to keep an eye out for a certain kind of item.
As you look at how to fix your money problems in retirement, keep in mind these three steps. The first two, budgeting and cost cutting, are time consuming, tedious but very important especially as you look for the equity you may have in your house or the cash value of any life insurance policies that you have. The third step of possibly increasing your retirement income can be as exciting as you want it to be. Colonel Sanders of Kentucky Fried Chicken fame built a fortune AFTER he retired so anything is possible. Don’t just accept your financial situation, go out and do something about it. Life is as exciting as you want it to be. It’s time to Enjoy Retired Life!
Thanks for visiting. If you like what you see here, please tell your friends. If you haven’t done so already, be sure you take The Self Discovery Challenge for Retirement! It’s designed to help you make the most of this wonderful time of your life. You’re never too old to discover something new about yourself!
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