By Jack Wallace, Director of Governmental & Lender Relations at Yrefy
While retirement might be something we all look forward to, during economically challenging times such as now, it can be difficult to continue living on a fixed income without missing payments, sacrificing needs and wants, or having to begin working again. According to credit karma, baby boomers have an average of $52,401 in debt (not including mortgages). Here are a few tips on how to shift your budget after retirement, so you can live the life you dreamed of and worked so hard to enjoy.
Make a Plan, Adjust it Occasionally if Needed
The first step of any budget is to make a plan. You’ll need to figure out exactly what your new monthly income will be, and what your monthly expenses will be. Chances are, you’ll need to make some lifestyle adjustments which you would much rather figure out sooner rather than later. The economy changes quickly, so giving yourself some leeway in your monthly expenses and calculating how much you’re spending each month is important so an economic crisis such as a rising interest rates, inflation, and ultimately a recession, doesn’t cause you panic when it comes to your finances.
Essential vs Non-essential
An important part of making a plan for a monthly budget is laying out your essential and discretionary expenses in an easy to see way where and how you are spending your money. How much of your monthly food expenses is going to ordering fast food or dining out at restaurants? How much could you save making more meals at home? Could you cut back on your entertainment expenses and look for more free or senior discount things to do around town? Budgeting for your housing repairs, health care, transportation and food are the top expenses not to mention essential, so be sure you’re accounting for essentials before looking at discretionary expenses.
Take Advantage of Discounts
Whether you’re an AARP member, a member of the Association of Mature American Citizens, or simply want to enjoy a discounted meal at your favorite restaurant from the 55+ menu, taking advantage of senior discounts whenever and wherever you can, is a great way to save money and still do the things you love. Don’t forget to enjoy the retirement stage of life – you’ve earned it! Check out free activities at your local community center, save money on traveling, and some pharmacies even offer discounts on certain medications.
Pay off or Consolidate Your Debts
Bankrate recently found that around 47% of credit card holders don’t pay off their credit card monthly and carry debt from month to month. and some people are barely able to make the minimum monthly payment. If you have a lot of credit card debt and other loans that you’re struggling to make payments on, consolidate the debt into one loan with a fixed rate, so you can factor in paying down this debt each month and don’t have any unexpected surprises when your bill comes in. This can give you peace of mind, and help you set a goal. If you have time before retirement, try setting aside extra money each month to pay a little more than the minimum that’s due so you can get the mountain of debt down sooner.
If you still have Federal student loan debt that you are repaying for your education or for one of your children or grandchildren, remember that you will start repaying that debt back again this October after almost four years of the Administrative Forbearance period that started in March 2020. Go to www.studentaid.gov to see what Income-Driven Repayment Plan works best for you to lower your monthly payment. Remember to check out the new S.A.V.E. plan that was announced on June 30th by the Secretary of the U.S. Department of Education.