Building Financial Security After Retirement In The New Year
According to the National Council on Aging, more and more seniors retire with debt each year, making financial security feel unobtainable to some individuals as they age. Building wealth after retirement is challenging, but you can take steps to make yourself feel more financially secure in the new year.
Understand Your Fixed Costs
One of the first steps in building financial security is understanding your fixed costs. Fixed costs are bills that stay the same month to month. Your fixed costs typically include rent, mortgage, and insurance. You’ll also want to include monthly payments for any debts you may have, such as credit cards or outstanding bills. Write down your monthly fixed costs on a piece of paper, or type them into a spreadsheet on the computer. Be sure to include the payment amount each month and where the payment is going.
Identify Your Income
Another essential first step in planning your yearly finances is identifying your monthly income. Write down your monthly income on the same piece of paper as your fixed costs. If you are not yet retired, your income would include your salary or wages. You may receive social security checks or rely on retirement savings if you are retired. Be sure to include any supplemental income you may receive, such as financial help from family or friends.
Once you’ve identified your fixed monthly costs and monthly income, subtract the two numbers. You want your income to exceed your fixed expenses. If they don’t, you’ll want to find ways to reduce those monthly expenses. They may mean refinancing your home, moving to a place with less rent, or finding less expensive insurance. If reducing fixed costs is not possible, you may need to consider ways to increase your income. That could mean a part-time job or reaching out to friends and family for financial support.
Budget for Essentials
Fixed expenses are likely not the only items you need to budget for. Each month, you’ll want to set aside money for essentials, such as groceries. You’ll also want to budget for possible expenses such as vehicle maintenance if you own a car, home repairs, or medical bills. Don’t forget to also budget for the fun things you enjoy, such as going out to eat or tickets to attend an event.
Make a Plan for Savings
Even in retirement, it’s vital to save for unexpected expenses. If you are not living on savings, place a small portion of your income into a savings account. You can think of it as part of your fixed monthly expenses. Each month, a percentage of your income goes into your savings account or retirement fund.
If you’re living on savings, you’ll need to find creative ways to build your savings. One option is to talk to your bank about saving account options. Most major banks offer high-yield savings accounts with decent interest rates and no monthly fees. Through a high-yield savings account, you earn a small percentage of interest on the principal in the account. The bank may have restrictions on how often you can take money out or put money in, but it’s an easy way to earn money slowly.
Consider Additional Ways to Cut Costs
Creating a budget and making a plan for savings is a significant first step for financial security, but if you find you’re spending more than what you’ve budgeted for each month, then you may need to find additional ways to cut costs. Start with your fixed expenses. Is there any way for you to lower those costs? This may mean downsizing or moving to a less expensive neighborhood. Next, consider any monthly expenses you pay but don’t use. For example, are you paying for a newspaper subscription that you don’t read or have a high-speed internet plan, but you rarely use the computer? Look through your expenses and be honest with yourself about what you need.
Working with Visiting Angels
Creating and maintaining a budget to build financial security is hard work, but you don’t have to do it alone. The team at Visiting Angels Chadds Ford can help you utilize technology to record your expenses or find a financial advisor if you’re seeking financial guidance. Our caregivers also help seniors with various daily tasks such as light housekeeping, meal preparations, medication reminders, personal grooming, and more.
Our Chadds Ford office serves those in Central and Southern Delaware County and Southern Chester County, PA. If you’d like to learn more about our services, you can call us at 484-770-8479 or complete this online form.