Jun 26: BEST FROM THE BLOGOSPHERE
June 26, 2023
Seven tips for stretching your fixed-income retirement dollars
Whether you are getting a monthly pension cheque, or annuity payments, or whether you are drawing down your retirement savings from a lump sum, one thing’s for sure — the amount of income you’ll be living on is fixed.
Unlike work, there’s no chance of a big promotion or bonus when you are retired. You have to live on a fixed income. So what can be done to cope?
Writing for the Supermoney blog, Julie Bawden-Davis offers up seven very helpful tips on how to get the most out of your fixed-income dollars.
First, she writes, you need to “live below your means.”
“If you’ve been saving up for retirement since your college years and can afford to party it up in the Caribbean well through retirement, more power to you. If not, get real. Living on 20-25 per cent less than your income enables you to save money for the unexpected, be it a medical problem that requires out-of-pocket expenses or a present for a surprise birthday party,” she writes.
One easy way to achieve this, she adds, is to ditch the car and take public transit (if you live somewhere where that’s doable).
Her second tip is to “micromanage your budget.”
“Prioritize your expenses, starting with set costs such as insurance, healthcare, rent or mortgage, and utilities. Then add the average amount you spend on discretionary expenses each month, such as entertainment, food, and gas,” she advises. Again, cut what you can with the goal of having 20-25 per cent of income directed to a savings account.
Her third tip is to avoid taking on new debt.
“A shiny new purchase may seem like a good idea at the time, but busting your budget can have a lasting impact that is likely to lower your standard of living substantially,” she explains.
She suggests that retirees consider moving to another jurisdiction that offers lower taxes, or to “downsize to a smaller place.”
“If you’re still living in the family home, now may be the right time to sell and move into a smaller, less expensive place. Doing so often gives you money to invest and save, and a smaller home will cost less to run,” she writes.
A key bit of advice offered in her column is the idea of enjoying what’s out there that is for free, or that costs very little.
“It’s ironic that when you finally have time to pursue hobbies and interests, your income is limited. It is possible, though, to enjoy yourself by spending little to no money at all. If you’re eligible, take advantage of senior specials, and check local publications and websites for free events. Museums, zoos, and botanical gardens often have complimentary admission days just for you,” she notes.
Her final bit of advice is to “unfix” your fixed income by doing a little work on the side. Working part time or having a “side hustle” can bring in a little extra money, and be fun as well.
“Living on a fixed income does take some adjustment, but with some creative budgeting, you can enjoy a satisfying retirement,” she concludes.
This is all very good advice, and we can add in a few more ideas, gleaned from our fellow senior citizens.
- Consider going to one vehicle. If you’re both not working, you can share one car rather than each having your own. You’ll save a fortune on fuel, maintenance, and so on.
- Some of our retired friends sold their houses and are now renting. No property taxes, no driveway shovelling, lawn cutting and other costly expenses.
- Thrift stores like Value Village or the Sally Ann are great places to get what you need for far less. We found a brand new cart bag for golf clubs for only $20 there!
The more income you end up with in retirement, the easier things will be. If you don’t have a workplace pension plan — like the majority of Canadians — don’t worry! Any Canadian with registered retirement savings plan (RRSP) room can join the Saskatchewan Pension Plan. Let SPP handle the heavy lifting of investing your savings and growing it into an income stream when you retire. You have the option, when you retire, of choosing a lifetime annuity for your SPP account.
And contributing to SPP is now limitless! You can contribute any amount annually (up to your available RRSP room) and can transfer in any amount from another RRSP. Check out SPP today!
Join the Wealthcare Revolution – follow SPP on Facebook!
Written by Martin Biefer
Martin Biefer is Senior Pension Writer at Avery & Kerr Communications in Nepean, Ontario. A veteran reporter, editor and pension communicator, he’s now a freelancer. Interests include golf, line dancing and classic rock, and playing guitar. Got a story idea? Let Martin know via LinkedIn.