The first few years of retirement can be particularly hazardous to your finances. When adjusting to your new lifestyle as a retiree, it’s easy to get caught up in the spending trap that can result from the increase in free time.
Many new retirees fill all that newfound free time with activities such as shopping, traveling, dining out or expensive new hobbies. An increase in spending is a common pitfall of the newly retired.
If you are recently retired or will be soon, it’s important to understand that time is money in retirement. Learning to spend your free time without spending money can help you ensure you’re able to stay retired.
The following tips can help you avoid this common mistake that new retirees often make:
Take time to decide what you really want.
When you’ve worked all your life, getting used to the newfound freedom of retirement can take some time. For many people, the sudden lack of obligations and structure is a significant adjustment. It’s also perfectly normal not to know what you want to do next. Learning how to be a retiree may take a little time, and it’s important to give yourself permission to do so.
It’s OK to take six months, a year or even longer to think about what you really want out of the rest of your life. You may want to create a written retirement vision to help you understand your goals and wishes.
Defining what’s most important to you and what you really want to do can help you avoid filling your time with excessive spending. And it can ensure that when you do spend money, it’s on the things that are most meaningful to you.
Create a budget.
A budget is a retiree’s best friend. It may be one of the most critical and effective tools for ensuring your finances stay healthy throughout your retirement. Yet, a recent Gallup poll revealed that two-thirds of Americans don’t use a budget.1
The ability to develop a monthly budget and track your spending is a skill that may be even more essential for retirees. After all, you want to make sure your money will support you throughout your whole retirement.
A budget makes it easy to keep your spending within your income limits. Tracking your spending habits gives you an awareness of exactly how much you’re spending and on what, and that knowledge allows you to be in control of your money. It may also be one of the most important ways you can help prevent financial difficulties from arising. Budgeting can empower you to make the best financial choices for yourself.
Find useful ways to spend your time.
When you’re retired, it can be difficult initially to find ways to spend your time that don’t involve spending money. One of the best parts of retirement, though, can be the opportunity it provides you to get more involved in your community and the causes you care about. You may find that the ability to use your time serving both your passions and others can be one of the greatest joys of retirement.
Wherever your interests and expertise lie, there are myriad organizations that depend on volunteers and would especially benefit from the depth of experience you may be able to bring. Contributing your time and experience to help others can be incredibly rewarding; it’s also just plain useful.
Low-cost hobbies, DIY projects around the house or watching the grandkids are also some great ways you can occupy your time without spending money. The essential thing is to find what works for you.
Want to know more about how to ensure your financial security in retirement? Let’s talk about it. Give us a call at Gallagher Financial Group, and we can help you plan your best retirement strategy today.
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