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Retirement budgeting 101: living comfortably on a limited budget

With a little creativity and flexibility, you can have the retirement you deserve

There is the retirement dream and then there’s retirement reality. The dream includes a care-free lifestyle highlighted by unlimited travel, new adventures, maybe a second home, all of which are available to those with retirement income to spare. For the majority of people, however, retirement reality is quite different, marked by a determined effort to live comfortably on a limited budget. A report released in June 2013 by Interest.com, finds that households headed by people age 65 or older are bringing in a median income of $35,107 a year, or more than 40% less than the median income of households headed by 45- to 64-year-olds. The good news is with a little creativity and flexibility, you can retire on a budget, have fun doing it and enjoy retirement. First off, breathe. With a little creativity and flexibility, you can retire on a budget and have fun doing it. These tips can help you get started:

  1. Assess your finances and create your budget. Getting a look at the big picture helps you see what you have to work with, and where you’ll be able to make smart choices about the lifestyle you want. If you’re just starting to think about saving for retirement, let this serve as a wake-up call. If retirement is fast approaching, you may be able to pinpoint ways to cut expenses – such as downsizing your housing - so you can enjoy the things you love, like travel and hobbies.
    Not sure where to start? Check out this article offering helpful tips on making a retirement budget. In addition, our planning tools and resources may help you get an overview of your finances.
  2. Keep track of your spending. Whether you opt to keep track of your spending daily, weekly, or monthly — on an Excel spreadsheet or a piece of paper taped to the fridge — find a method that works for you. That way, you’ll be more likely to stick with it. Keeping an eye on spending helps you see just where your money goes — and will help you cut back if need be.
  3. Get your significant others on board. Enlist the help and support of your family, spouse or partner. Make sure whomever you share your finances with is in this with you. Work out solutions to spending and saving and have a common goal. Give each other a little leeway — remember that keeping your budget on track takes time and effort. And by all means, celebrate your progress together!
  4. Consider making changes to suit your budget — and your lifestyle. If your kids are grown, consider downsizing your house, or maybe even moving to a more affordable neighborhood. Perhaps even explore the idea of moving to a whole new city! Think lower taxes, fewer maintenance fees, and lower utility bills.
  5. Be a smart consumer. Do your research to be sure your service providers offer a competitive price. Consider paring down your cable television package, or switching to a pre-paid cell phone plan.
  6. Get a little creative. Consider sharing a home or a car with a friend or family member and cut those expenses in half. Rather than buying something you need — like a garden tool or extra chairs for a family barbecue – borrow them from a neighbor, or use a sharing network such as Freecycle or Yerdle. If you love to shop, check out outlet stores, thrift shops, or eBay –some terrific bargains on brand-name items can be found.
  7. Look for low-cost or free entertainment options. Sometimes great entertainment is right in your own backyard. Many cities and towns offer free concerts, fairs, and sporting events. Look into your local senior center for classes and recreation opportunities. Check out your library for book clubs, lectures, and workshops in addition to digital and print books and magazines, movies, and book clubs, movies, and computer use.
    Be sure to take advantage of senior discounts offered in local restaurants, movie theaters, and museums, and consider joining AARP for discounts as well as insurance products.
  8. Continue to educate yourself on your options. Don’t stop reading. If you’re looking for guaranteed income, there are several options, including income annuities that might fit your situation. Do your research and consider your options. Recommended reading from our site includes:

You’ve earned your retirement, now go enjoy it! And if you have questions along the way, your New York Life agent is always here to help. Simply use the Talk to Us tab or the Consult an Agent form on the page, and an Agent in your area will contact you at your convenience. Or click here to learn all the ways we can work together.

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