How to Live Within Your Means

Try these strategies to control your expenses in retirement.

When you retire you no longer get a paycheck. You knew it was going to happen. But knowing it and experiencing it are two different things. If you are struggling to live within your budget, here are five suggestions that will bring your retirement expenses into line with your more modest retirement income.

1. Cut back where it doesn’t count. The key is to economize on goods and services that you don’t really use or care about, so you hardly notice the difference. Once your kids leave home, reassess your bills to make sure you’re not paying for things that were important to your kids but that you don’t use, such as a family membership at the sports club or a high cost cellphone service. Maybe you don’t need a land line if everyone in the household has their own smartphone. Maybe you no longer need cable if you have Netflix and Amazon Prime. And maybe you don’t need to shop at a big box store anymore. Remember, you’re only cooking for yourself now, not a whole crew, so you don’t need a four gallon pack of orange juice, no matter how great a bargain it is. And if this seems like small potatoes, remember, one small change might not make a difference, but several can add up to real money.

2. Sell what you aren’t using. You might have a basement full of old books, sports equipment and furniture. You can let it mold and later pay someone to haul it all away. Instead, you could sell the items on eBay or Craigslist. Or you could hold a tag sale, or bring a car full to the church rummage sale. If you donate items to charity, you won’t bring home any cash, but you probably can take a tax deduction. And don’t just focus on the little stuff. Do you still use the boat you bought when the kids were teenagers? Do you have an extra car that’s rusting away in the driveway, or a vacation condo or time share you hardly ever use anymore? Even if your unwanted items have greatly depreciated, it’s still better to have the money now, rather than the headache of getting rid of it all later on.

3. Control your credit. As you approach retirement you should be paying down debt, not taking out new loans. You’ll be living on a fixed income, with no more salary increases to cover those additional monthly payments. Credit card debt is the worst, since interest rates are high and penalties lurk around every corner. So if you’re running a balance, pay it off as soon as you can, and in the meantime call the credit card company to try to negotiate a better rate. Your mortgage is probably the last debt to pay off. Don’t worry too much if you carry a mortgage into retirement. You’re not alone. But trust me, there’s no greater feeling of security than living in a home that’s free and clear of the bank.

4. Use your head when you travel. Traveling is often at the top of any retiree’s bucket list. And there’s no reason it shouldn’t be. But a little bit of research can go a long way in saving money. If you’re going to do a lot of traveling, it might pay to sign up for airline and hotel loyalty programs. Use the many resources on the Internet to comparison shop and search for hotel and resort bargains. Check out HomeAway and Airbnb for nicer accommodations at reasonable prices. Now is actually a pretty good time to travel abroad, because the dollar is strong and coverts to more foreign currency. But a lot of people save money by staying closer to home. If you take a driving vacation you can use the savings on airfare to book a little nicer place to stay.

5. Put the kibosh on your kids. You’ve been conditioned for years to buy things for your kids and to pay their bills. But the kids are adults now. Sure, help them out if you can afford it. But there’s no law that says you have to subsidize their rent, or pony up for the down payment on a car or a house. Remember the old saying about giving your kids roots and wings. You gave them strong roots. Now it’s time to give them wings, and let them fly on their own.

Tom Sightings,