As a working American, you’re naturally not used to living off a fixed income. If you have been a loyal employee of your company for the past several years, you’re used to receiving yearly raises and even the occasional bonus around the holidays or when sales are up. But when you enter retirement, all that goes away. The income you receive during retirement is fixed, limited, and sometimes slim. Especially if you didn’t make as much headway with your retirement savings as you wished you had.
However, just because retirement income lacks a yearly bonus, doesn’t mean you necessarily have to change your lifestyle. Not entirely, anyway. We’ve got some helpful tips that you can apply now to increase your savings pre-retirement, or you can use to maximize your fixed income while in retirement. Read on for our savings tips!
Tip #1: Rent Out Your Basement
Chances are, if you ask your friends, one of them has rented out a room in their house at one point or another. While sharing your living quarters with a stranger or friend isn’t the most luxurious way to live, it has so many benefits for your wallet. By renting out your house, you could potentially eliminate your mortgage payment, or at least cut out a huge chunk, with your tenant’s rent payment. The money that you normally contribute towards the mortgage payment can now go to your retirement savings account, significantly increasing your savings. Once you reach retirement, you can continue to rent out the basement or another room in your house to supplement your fixed income.
Tip #2: Start a Side Hustle
Are you dreaming of all the things you will have time for once you retire? Maybe you’ve been itching to pick up knitting or crochet, or you’ve always wanted to see what you can do with a little paint and an empty canvas. If you enjoy these things, chances are others do, too. You can easily capitalize on your favorite hobby by turning it into a small side hustle. Etsy is a great avenue for small business owners to set up shop and start selling their brand-new products.
If you don’t think you have a crafty bone in your body, that’s okay. Consider picking up a part time job that works with your schedule. You’d be surprised at the number of part-time jobs out there that are perfect for retirees. Check out a list from Forbes here.
Tip #3: Discipline Yourself
Saving for retirement takes immense discipline but maximizing that hard-earned money after retirement takes discipline to another level. Two ways you can discipline yourself with your income include putting yourself on a cash allowance and avoiding boredom. When we’re bored, we tend to hop on our laptops and either browse social media or visit our favorite online shop, where we convince ourselves we’ve earned that blouse we’ve been eyeing all month. You can’t deny how many baby boomers today love their Facebook! The percentage of active older adult users on Facebook beats the percentage of younger adult users by 7%.
The best way to avoid overspending when online is to set yourself on a cash allowance. Take a specific amount of cash from your account on the same day each week and limit your shopping expenses to that amount. This includes your weekly latte, eating out, and clothing – all unnecessary spending. Your cash allowance will keep you disciplined and on track.
You don’t have to wait until you retire to start applying these tips – the earlier you start, the better! If you’re interested in hearing more advice on how to maximize your retirement savings, whether you want tips for your 401k or other retirement funds, contact Watermark Wealth Strategies today!