9th March 2016 at 3:25pm
Financial experts throw around a bunch of guesstimates about how much you’ll need to save for retirement – but the actual amount is always very personal. It really depends on what you want from your life after work.
The magic number
There are methods of calculating what that number might be, and it’s something we touched on in our recent feature “Retirement savings – what’s the magic number?”
If you’ve tried conjuring up your magic number and are now worried you might fall short, it’s worth remembering there are still ways and means to free up cash in retirement. The more you can keep costs down once you stop working full time, the better off you’ll be.
Five ways to generate cash
Now you are no longer working, here are five strategies that could help you free up some funds, reduce your living expenses and make time your financial friend:
Look at where you live
Have you been living in a neighbourhood that was more about your kid’s catchment area or convenience for commuting? Where you live plays a big role in how much you pay for food, taxes and a variety of other services. Moving to an area where the cost of living is significantly less could give you more bang for your buck and allow you to slow down your spending.
Downsize the house
Do you really need the same size of house now you’re an empty nester? There are plenty of reasons why moving into a smaller home makes sense. Any profit generated can be used as a welcome cash injection to improve your quality of life, reduce annual household bills and you’ve the added bonus of fewer rooms to clean!
Downsize your vehicles
Are you a two car family? It could well be the case that both you and your spouse needed a car to commute or a second to act as a taxi for the children. You might be able to now survive just as easily on one, or with the good public transportation available, not need one at all. This will reduce insurance, fuel and maintenance costs of the second vehicle.
You could even downsize the number of cars you own but upsize the one you currently have, this could still allow for significant savings. And of course you could go the other direction and just pick up a small run-around for the pair of you and cut costs even further.
Check your insurances
Do you have a bunch of insurances that made sense when you were working? Ditching them could save you a considerable amount annually. If you don’t have any dependents that would need financial help after you died, you probably don’t need life insurance in retirement. If you aren’t working anymore, you can likely skip disability insurance. Have a look at what you currently have.
Make the most of your time
Time is money, and it’s a commodity retirees have in abundance and working people struggle to secure. Used wisely, time can help you save money on a whole host of things. For example, if you’ve been used to holidaying each year, you still can; but now you can beat the peak periods and the peak prices. You can even take advantage of those late deals as you’ve the freedom to go when you please.
You’ve also got the time to shop around for other bargains you may have been paying through the nose for previously, and don’t forget you may also be eligible for senior discounts too.
Don’t scramble your nest egg
Retirement should be one of the most relaxing and fun stages of your life. To help secure the life after work you desire, we’d always stand by the old adage that you should save as much as you can for as long as you can. However, once you have arrived, just a few simple changes can help the money you saved to last longer.
The information in this blog or any response to comments should not be regarded as financial advice and is based on our understanding in March 2016.