by Liam Johnson
Many of us are excited to retire, but the financial realities of not working anymore can be challenging. Without a steady income, you might feel overwhelmed by the cost of daily life – especially with inflation and the cost of living rising.
However, there are some simple strategies you can use to make your money go further in retirement, allowing you to truly embrace this exciting time.
Perhaps the most obvious (and yet complicated) step you can take to make your money last is to continue working for longer. While this might be easy for some, if you are struggling with your work or are just ready for something new, this might not be a reasonable option for you.
If you can work for longer and retire a little later, this can increase the amount of pension you receive when you do retire, allowing for a more comfortable lifestyle. This is a great choice for those who were seeking early retirement, but are thinking twice. If you can live on a lower salary, you could discuss going part-time with your current employer.
You may have the opportunity to choose how you receive your pension payments. Traditionally, it’ll be paid in monthly lifetime installments, to provide a steady stream of income. However, you may have the option to receive it in a lump sum, which could work better for your personal approach to finances. Before choosing, be sure to consider the pros and cons of each option so you can be confident with your decision.
If you are a homeowner, then it might be worth considering downsizing to a smaller home. Large houses can cost a lot in utilities and maintenance, and downsizing means you can enjoy spending less time tending to your home and more time on new hobbies and experiences.
If you can’t downsize, or simply don’t wish to, then there is an option to access equity release for your home – where you will receive a lump sum of money (essentially selling your home), while still being able to live in it. Be careful with this option, though, as it can have risks attached. Speak to a professional before making any decisions.
Your expenses are something you can control more tightly when you have time to focus on them. In retirement, you may feel like everything is more expensive, and now is a good time to cut back a little and spend your money more wisely on things you get real joy out of, like travel. You can create a budget that suits your new circumstances, establishing what your monthly pension income will be, and assessing your outgoings. If there is a financial gap in this, you can find out where you will be able to make adjustments to save money.
Getting used to retirement isn’t always easy, but making sure that you are financially prepared will help. When considering how you can make your money go further, remember that you should be realistic about which of these methods will work for you – and help you to get the most out of the next chapter of your life.
Liam Johnson is a digital consultant with several years’ experience creating content for a range of different companies worldwide. He majored in creative writing in university and is always eager to expand his knowledge around different subjects.